Polyair Inter Pack Inc.

Polyair Inter Pack Inc.

January 21, 2008 19:27 ET

Polyair Inter Pack Inc. Announces 2007 Results and Extension of Bank Financing

TORONTO, ONTARIO--(Marketwire - Jan. 21, 2008) - Polyair Inter Pack Inc. ("PPK" or the "Company") (TSX:PPK) announced a pre-tax profit from continuing operations before interest and unusual items of $2.3 million in 2007 compared to a loss of $720,000 in 2006. In early 2006, the Company adopted a strategy of narrowing its focus to its protective packaging business and spent the next twelve months divesting its Pool, PXL and PSC businesses. The Company has reported 2006 - 2007 results from its Pool, PXL and PSC Divisions as discontinued operations to reflect the sale of these businesses. Proceeds from these sales and three sale and leaseback transactions were used primarily to pay down debt, which has been reduced by approximately $22.4 million over the 2006 - 2007 fiscal period.

In its core packaging business, the Company implemented a plan to improve the profitability of its manufacturing operations, reduce its fixed overhead costs and establish an in-house product development capability. In reviewing future capacity requirements, management determined that it had surplus equipment and in the second quarter of 2007 booked an impairment charge of $2.1 million.

Earnings before interest and other non-recurring costs, for the year as a whole, improved over 2006 as a result of lower raw material costs in the first half of the year and reduced fixed infrastructure costs. In the fourth quarter of 2007, higher petrochemical prices and strong overseas demand drove up resin prices resulting in reduced profit margins. Resin prices have continued to increase, and the Company has announced selling price increases to try and offset these higher costs. Notwithstanding these price increases, the Company expects its results in the upcoming year to be adversely impacted until such time as resin costs stabilize.

During the year, the Company was in negotiations with a potential acquirer and incurred professional fees and other costs. In October 2007, negotiations ceased and the Company booked a charge to earnings to write off these costs.

In 000s USD, except for per 3 Months Ended 12 Months Ended
share amounts. 31-Oct 31-Oct 31-Oct 31-Oct
2007 2006 2007 2006
------------------ ---------------------
Sales from continuing operations $ 30,340 $ 30,402 $ 119,590 $ 124,470

Earnings from continuing
operations before interest,
taxes, depreciation and
amortization (EBITDA)(i) $ 1,224 $ 2,014 $ 7,594 $ 5,689

Income / (loss) from continuing
operations, before taxes and
other income and expenses ($ 167) $ 379 $ 2,294 ($ 720)

Other (income) and expenses
Interest and other charges 528 692 2,576 2,879
Provision for impairment of
assets - 12 2,102 (137)
Professional fees on Company
sale negotiations, and other
expenses 1,077 220 1,142 29
Total other (income) and
expenses $ 1,605 $ 924 $ 5,820 $ 2,771

(Loss) from continuing
operations ($ 1,962)($ 1,461)($ 3,366)($ 3,602)

Net income / (loss) ($ 1,920)($ 8,359) $ 1,368 ($ 23,507)

Net income / (loss) per share
- Basic ($ 0.27)($ 1.23) $ 0.20 ($ 3.46)
- Diluted ($ 0.27)($ 1.23) $ 0.20 ($ 3.46)

Prior period amounts have been reclassified from statements previously
presented to conform to the presentation of the 2007 Consolidated Financial

(i) EBITDA is not a recognized measure under Canadian Generally Accepted
Accounting Principles and readers are cautioned that EBITDA should not be
considered as an alternative to net income or loss or cash from operating
activities as an indicator of the Company's performance or cash flows.
EBITDA, as calculated by the Company, is net income or loss from
continuing operations before interest, other income and expenses,
depreciation and amortization, and income taxes. Full financial
statements along with Management's Discussion and Analysis can be
obtained from SEDAR (www.sedar.com) and the Company's web site at

The Company also announced that its primary lender has agreed in principle to provide $2 million of interim financing while the Company raises additional capital to fund its business expansion needs, and to extend the existing credit facility to November 1, 2009.

In announcing the Company's results, Victor D'Souza, CEO stated: "While the last two years have been challenging, I am pleased to report on progress achieved on several fronts and I appreciate the support of our customers and suppliers while we transitioned our business. Internally, there is renewed energy and excitement for the future and we will continue to focus on delivering improved results to our investors."

The Company also announced that its Board of Directors has accepted the resignations of two of its directors, Beth Satterfield and Lawrence Dale, and has appointed Louis Manetti, Douglas Patterson and Victor D'Souza as directors. Mr. Manetti, who is currently the Managing Director of Glencoe Capital, was appointed Chairman of the Board. Jon Burgman, Robert Gerrity, Sidney Greenberg and Sol Nayman will continue to serve as directors of the Company.

Polyair Inter Pack Inc. (www.polyair.com) manufactures and distributes a wide range of protective packaging products and swimming pool covers in North America. The Company operates eight manufacturing facilities, seven of which are in the USA where it generates the majority of its sales.

Certain information included in this news release contains statements that are forward-looking, such as statements relating to anticipated future revenues and profitability of the Company. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statements made by or on behalf of Polyair Inter Pack Inc. In addition, Polyair Inter Pack Inc. expressly disclaims any obligation to publicly update or alter its previously issued forward-looking statements.

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