Peak International Reports First Quarter Financial Results

Cash Position of $20 Million Maintained; No Long-Term Debt;

Cash Flow Positive from Operations for the Quarter

    HONG KONG, Aug. 1 /PRNewswire-FirstCall/ -- Peak International Limited
 ( PEAK) today announced financial results for the first quarter of
 fiscal year 2008 ended June 30, 2007.
     Net sales for the quarter ended June 30, 2007 were $12.0 million
 compared to $12.1 in the previous quarter and $18.7 million in the
 comparable quarter of the previous year. Peak recorded a net loss of $2.7
 million, or $0.22 per basic and diluted share, for the quarter ended June
 30, 2007, compared to a net loss of $2.2 million, or $0.18 per basic and
 diluted share, in the previous quarter and net income of $0.9 million, or
 $0.08 per basic and diluted share, in the comparable quarter last year.
     Dean Personne, president and chief executive officer of Peak
 International, said, "Sales for the first quarter of fiscal 2008 were
 essentially unchanged compared to the previous quarter, indicating the
 first break in the downward trend of recent quarters. This is an important
 development as we continue to transform the company. We expect the
 improvements and operating efficiencies that we have achieved in our
 manufacturing operations in the past year to set the stage for significant
 operating leverage as we turn the corner on increasing sales."
     Mr. Personne continued, "As the sales initiatives we commenced in
 recent quarters have become more embedded throughout our U.S.-based and
 international sales groups, we have a strong sense of optimism as we
 continue through fiscal year 2008. We believe that the marketing efforts of
 our partner SaleAMP is better positioning our sales representatives to more
 opportunistically drive sales in the field. We are pleased with the
 development of new wafer products by our association with GPI and the
 launch of our UltraLite(TM) product line is generating positive responses
 from our customers. We are receiving indications of interest from a number
 of prospective new customers and we are hopeful to convert those
 indications to sales in the coming quarters. These new products create
 additional opportunities for PEAK to become the provider of choice in a
 number of product lines that fulfill customer needs. Additionally, we
 believe our recent entry into the medical disposables market will provide
 diversification in the industries that we serve going forward."
     In the U.S. market, Jim Steger, our vice president - disc drives, has
 been actively meeting with prospective customers as we seek to resume disc
 caddy sales. We are pleased with the level of interest we are receiving and
 expect continued positive developments going forward."
     Gross profit margin for the quarter ended June 30, 2007 was 5.4%
 compared to 11.9% in the previous quarter and 25.9% in the comparable
 quarter of the previous year. Lower net sales in the two most recent
 quarters versus the comparable quarter last year resulted in a greater
 proportion of fixed manufacturing overhead being absorbed in cost of goods
 sold. The lower production level was simply insufficient to cover all of
 the factory overhead costs. The gross margin for the first quarter of
 fiscal 2008 also included approximately $0.6 million of unfavorable
 material cost and usage variances and $0.3 million of finished goods that
 were scrapped due to obsolescence.
     Effective April 1, 2006, Peak adopted Statement of Financial Accounting
 Standards SFAS No. 123R using the modified prospective method, which
 requires the expensing of all stock-based compensation. For the quarters
 ended June 30, 2007 and 2006, the Company reported non-cash, stock-based
 compensation of $115,000 and $165,000, or $0.01 and $0.01 per share,
 respectively. At the conclusion of the first quarter of fiscal 2008, the
 Company had approximately $20 million in cash and cash equivalents and no
 long-term debt.
     Mr. Personne concluded, "Throughout this transitional period the
 underlying financial condition of Peak International continues to be
 strong. We maintain a solid cash position, with no long-term debt, and we
 continue to generate positive cash flow from operating activities. We plan
 to continue to prudently manage our cash as we work our way toward
 achieving additional traction on our strategic sales initiatives. Our
 company is currently valued at less than book value and we believe that
 does not reflect an appropriate assessment of Peak. We are committed to
 taking the necessary steps that will enhance value for our loyal
 shareholders."
     Earnings Call
     Peak will host a conference call to discuss the Company's fiscal 2008
 first quarter results on Thursday, August 2, 2007 at 10:00 AM ET. To access
 the teleconference, please call (888) 413-9033 (domestic) or (706) 679-5076
 (international). To listen to the teleconference via the Internet, go to
 http://investors.peakinternational.com/ and click on the first quarter 2007
 teleconference link. A replay of the call will be available at (800)
 642-1687 (domestic) or (706) 645-9291 (international), access number
 7199511 for 3 days following the call, and the web cast will be archived on
 the Company's website, http://www.peakinternational.com/investor.html, for
 30 days.
     About Peak International Limited
     Peak International Limited is a leading supplier of
 precision-engineered packaging products for storage, transportation and
 automated handling of semiconductor devices and other electronic
 components. There are approximately 1,600 people who are working for Peak
 directly worldwide or indirectly in its factory in Shenzhen, the PRC, which
 is operated pursuant to a processing agreement with an unaffiliated party.
 Peak operates warehouses throughout the world and offers JIT services to
 leading semiconductor manufacturers and assemblers.
     Cautionary Note Regarding Forward-Looking Statements
     This press release contains forward-looking statements within the
 meaning of the "safe harbor" provision of the Private Securities Litigation
 Reform Act of 1995, including, without limitation, statements related to
 our ability to: (i) determine whether the Company's net sales decline has
 ended, (ii) achieve and manage manufacturing efficiencies while increasing
 sales, (iii) achieve increased sales as a result of our sales initiatives
 (including without limitation the launch of new products and meetings with
 current and prospective customers) in order to increase sales, diversify
 our markets and mitigate cyclical risks, (iv) convert indications of
 interest from current and prospective customers to actual sales, (v)
 continue to generate cash from operating activities and to maintain the
 Company's current cash position, (vi) increase the Company's market value
 and (vii) achieve profitability on a quarterly or yearly basis and increase
 shareholder value while managing our assets. These and other
 forward-looking statements are not guarantees of future results and are
 subject to known and unknown risks, uncertainties and other factors that
 may cause actual results, performance or achievements of the Company to be
 materially different from any future results, performance or achievements
 expressed or implied by the forward-looking statements. Such factors
 include but are not limited to: price of raw materials, factors relating to
 conditions in semiconductor, disk drive and electronic industries, the
 amounts the Company may have to pay for workers at the PRC factory operated
 by a third party, difficulties related to working in the PRC, including
 regional government and processing partner relations, the market acceptance
 of its products, the introduction of new products by the Company's
 competitors, any future economic downturn, and other matters that could
 cause actual results to differ materially from the projections made herein.
 Additional risks are detailed in the Company's filings with the Securities
 and Exchange Commission, including the Company's Annual Report on Form 10-K
 for the year ended March 31, 2007, filed on June 29, 2007. Statements
 included in this press release are based on information known to the
 Company as of the date of this release, and the Company assumes no
 obligation to update or revise any forward-looking statements or to update
 the reasons why actual results could differ from those projected in any
 forward-looking statement in this release.
     Contact: John Supan, Chief Financial Officer of Peak International
 Limited, Hong Kong, +852-3193-6000; or Joe Diaz, or Joe Dorame, or Robert
 Blum, all of Lytham Partners, LLC, +1-602-889-9700.
      Consolidated Statements of Operations
 
    (in thousands of United States Dollars, except share and per share data)
 
 
                                                  Three Months Ended June 30,
                                                       2007           2006
                                                    (Unaudited)   (Unaudited)
     Net Sales                                        $12,001        $18,653
 
     Cost of Goods Sold                                11,358         13,818
 
     Gross Profit                                         643          4,835
 
     Selling and Marketing                              1,917          2,261
     General and Administrative                         1,356          1,580
     Research and Development                             191             36
 
     (Loss) Income from operations                    (2,821)            958
     Other expenses - net                                (96)           (55)
     Interest income                                      187            117
 
     (Loss) Income Before Income Taxes                (2,730)          1,020
     Income Tax Expense                                   (1)           (82)
 
     NET (LOSS) INCOME                               $(2,731)           $938
 
 
     (LOSS) EARNINGS PER SHARE
 
         - Basic                                      $(0.22)          $0.08
         - Diluted                                    $(0.22)          $0.08
 
     Weighted Average Number of Shares Outstanding
 
         - Basic                                   12,423,000     12,420,000
         - Diluted                                 12,423,000     12,425,000
 
 
                          Consolidated Balance Sheets
                    (in thousands of United States Dollars)
 
 
                                                     June 30,       March 31,
                                                       2007           2007
                                                    (Unaudited)   (Unaudited)
     ASSETS
     Current Assets:
 
         Cash and cash equivalents                    $19,980        $20,366
         Restricted Cash                                  983          1,128
         Accounts receivable-net of allowance
          for doubtful accounts of $366 at
          June 30, 2007 and $427 at March 31, 2007      9,932          9,279
         Inventories                                   10,796         10,959
         Other receivables, deposits and prepayments      760            852
 
             Total Current Assets                      42,451         42,584
 
     Property, plant and equipment - net               18,296         19,278
     Land use rights                                      698            703
     Deposits for acquisition of property,
      plant and equipment                                  74             60
     Other deposit                                        301            301
 
     TOTAL ASSETS                                     $61,820        $62,926
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current Liabilities:
 
         Accounts payable:
 
         - Trade                                       $5,047         $3,689
         - Property, plant and equipment                  165             78
         Accrued payroll and employee benefits          1,273          1,165
         Accrued other expenses                         1,931          1,990
         Income taxes payable                               2             95
 
             Total Current Liabilities                  8,418          7,017
 
     Deferred Income Taxes                                  -              -
 
         Total Liabilities                              8,418          7,017
 
     Stockholders' Equity:
 
         Share capital                                    124            124
         Additional paid-in capital                    27,822         27,707
         Retained earnings                             26,600         29,331
         Accumulated other comprehensive loss         (1,144)        (1,253)
 
             Total stockholders' equity                53,402         55,909
 
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $61,820        $62,926
 
 
                     Consolidated Statements of Cash Flows
                    (in thousands of United States Dollars)
 
 
                                                   Three Months Ended June 30,
                                                      2007            2006
                                                  (Unaudited)     (Unaudited)
 
     Operating activities:
 
     Net (loss) income                              $(2,731)           $938
     Adjustments to reconcile net (loss)
      income to net cash provided by
      (used in) operating activities:
       Depreciation and amortization                   1,614          1,658
       Deferred income taxes                               -             80
       Loss on disposal/write-off of property,
        plant and equipment                               36             23
       Allowance for doubtful accounts                  (61)             40
       Non-cash share-based compensation                 115            165
     Changes in operating assets and liabilities:
 
       Accounts receivable                             (592)        (1,878)
       Inventories                                       163            (8)
       Other receivables, deposits and prepayments        92           (81)
 
       Accounts payable-trade                          1,358            581
       Accrued payroll, employee benefits
        and other expenses                                49           (35)
       Income taxes payable                             (93)              2
       Cash held in escrow for terms of sale
        agreement for disposal of a subsidiary           641            641
 
       Cash held in escrow for funding of certain
        contingent obligations under existing
        contracts with senior management               (496)            413
 
     Net cash provided by operating activities            95          2,539
 
     Investing activities:
 
       Acquisition of property, plant and equipment    (576)        (1,318)
       Increase in deposits for acquisition of
        property, plant and equipment                   (14)          (107)
 
         Net cash used in investing activities         (590)        (1,425)
 
     Net (decrease) increase in cash
      and cash equivalents                             (495)          1,114
 
     Cash and cash equivalents at
      beginning of period                             20,366         17,441
 
     Effects of exchange rate changes on
      cash and cash equivalents                          109             93
 
     Cash and cash equivalents at end of period      $19,980        $18,648
 
     Supplemental cash flow information:
 
       Cash paid during the period
 
         Income taxes                                      94              -
 
 

SOURCE Peak International Limited