Peerless Systems (PRLS) set to join the new Russell Microcap Index

Peerless Systems Corporation (PRLS) is set to join the new Russell Microcap™ Index when Russell Investment Group reconstitutes its family of U.S. indexes on June 24, 2005. Russell recently posted a preliminary membership list at www.russell.com/US/Indexes.

The Russell Microcap Index, which will be comprised of the smallest 1,000 securities in the small-cap Russell 2000Ò Index plus the next 1,000 companies, based on a ranking of all U.S. equities by market capitalization. This new index offers managers and other investors a comprehensive, unbiased barometer to compare their performance against the genuine microcap marketplace of stocks

Russell indexes are widely used by investment managers and institutional investors for index funds and as benchmarks for both passive and active investment strategies. More than $2.5 trillion in assets currently are benchmarked to them. Investment managers who oversee these funds purchase shares of member stocks according to that company’s weighting in the particular index.

Companies slated for the Russell Microcap were ranked as of May 31 by total market capitalization and weighted based on free-float adjustment, an integral aspect of Russell index methodology. Free-float adjustment means stocks are weighted by their available market capitalization, which is calculated by multiplying the primary closing price by the available shares.

About Peerless (PRLS)
Peerless Systems Corporation, together with its wholly owned subsidiary, Peerless Systems Imaging Products, Inc., licenses software-based imaging and networking technology for controllers in embedded, attached, and stand-alone digital document products. It also integrates software into the printers, copiers, and multifunction products of original equipment manufacturers (OEMs). The company develops controller products and applications for sale to OEMs and distribution channels. Its digital document products include monochrome and color printers, copiers, fax machines, and scanners; as well as multifunction products that perform a combination of these imaging functions. Peerless Systems has operations in North America, Europe, and Asia. It has strategic partnerships with Adobe Systems Incorporated and Novell, Inc. The company was founded in 1982 and is headquartered in El Segundo, California.

Selected First Quarter and Recent Highlights: Peerless Systems Corp.

- First quarter revenue up 107% to $7.2 million versus Q1 last year; revenue exceeds high-end of previous guidance range by 14%
- Company reports net income of $0.4 million versus previously anticipated net loss
- Kyocera-Mita makes initial $2.0 million quarterly payment for three-year engineering services project and agrees to $0.25 million incentive bonus
- Company raises top- and bottom-line guidance for fiscal 2006

Russell, a global leader in multi-manager investment services, provides investment products and services in more than 39 countries. Russell manages more than $135 billion in assets and advises clients worldwide representing $2.3 trillion. Russell is a subsidiary of Northwestern Mutual and is headquartered in Tacoma, Wash., with additional offices in New York, Toronto, London, Paris, Singapore, Sydney, Auckland and Tokyo.

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