Bridgewater Systems Announces Record Revenue for Fiscal 2007



    OTTAWA, Feb. 27 /CNW/ - Bridgewater Systems (TSX: BWC) today announced
financial results for the fourth quarter and year ended December 31, 2007. All
amounts are stated in Canadian dollars.

    
    Fiscal 2007 Highlights

      -  Revenue increased 27% to $39.2 million, compared with $31.0 million
         in fiscal 2006;
      -  Revenue in common currency rose 32% over 2006;
      -  Sales outside North America increased to 18% of total revenue,
         from 12% in 2006;
      -  Q4 2007 represented the Company's fifteenth consecutive quarter of
         profitability;
      -  Customer deployments through direct and indirect channels surpassed
         100;
      -  Completed an initial public offering on the Toronto Stock Exchange
         in December 2007, raising net proceeds of $17.3 million.
    

    "Our solid financial performance continued in 2007, highlighted by record
full-year revenue. Our core CDMA business continued to perform strongly, and
we made significant progress building a platform for growth in 3G GSM and 4G
access technologies such as WiMAX and LTE," said Ed Ogonek, CEO of Bridgewater
Systems. "We expect increased operating margins and continued strong top-line
growth this year as we focus on increasing our penetration of our existing
customer base, growing our business outside North America, expanding our
product portfolio, and capitalizing on the evolution of broadband 3G and 4G
network technologies."

    Financial Review

    Fourth Quarter 2007

    For the fourth quarter of 2007, revenue was $11.8 million, a 24% increase
from the fourth quarter of 2006. Net income for the fourth quarter of 2007 was
$1.9 million, or $0.09 per diluted share, compared to $9.2 million, or
$0.45 per diluted share, in the comparable period. The most significant
changes year-over-year relate to:
    
      -  a future income tax recovery which decreased by $7.0 million,
      -  net foreign exchange fluctuations of $0.8 million, and
      -  a $0.5 million decrease in Canadian federal investment tax credits
         (ITCs). As a public entity, fewer ITCs are available to the Company.
    

    Excluding these items, net income would have been $1.4 million in the
fourth quarter of 2007, compared to $0.3 million in the same period in 2006.
This is a non-GAAP measure that does not have any prescribed meaning by GAAP
and is unlikely to be comparable to similar measures presented by other
issuers. This may be a useful measure for investors to help further understand
how operating results compare excluding these items.

    Fiscal 2007

    For the year ended December 31, 2007, revenue rose 27% to $39.2 million,
compared with $31.0 million in the prior year. Revenue growth in common
currency was 32%. Currently, greater than 90% of the Company's revenue is in
U.S. dollars. Net income for the year ended December 31, 2007 was
$2.7 million, or $0.13 per diluted share, compared to $10.8 million, or $0.55
per diluted share, in the prior year. The major differences in net income for
fiscal 2007 versus fiscal 2006 related to:
    
      -  a future income tax recovery which decreased by $7.0 million,
      -  net foreign exchange fluctuations of $1.8 million, and
      -  a $1.0 million decline in ITCs.
    

    Excluding these items, net income would have been $2.9 million in fiscal
2007, compared to $1.2 million in fiscal 2006, which provides management
assessment of income from operations activities. This is a non-GAAP measure
that does not have any prescribed meaning by GAAP and is therefore unlikely to
be comparable to similar measures presented by other issuers. This may be a
useful measure for investors to help further understand how operating results
compare excluding these items.

    Operational Highlights

    During 2007, Bridgewater made progress building a solid foundation for
growth in new and adjacent wireless markets such as 3G GSM, WiMAX and LTE. The
Company completed core development to extend its product offerings into 3G GSM
and WiMAX solutions. Bridgewater's AAA Service Controller was certified by the
WiMAX Forum in August. Bridgewater also completed a number of WiMAX
interoperability tests with key partners such as Alvarion, Motorola, Nortel,
Nokia Siemens, Starent, Verint Systems and Verisign.
    By the end of the year, the Company had two 3G GSM customers in Asia and
active WiMAX engagements with major providers in North America, EMEA and APAC.
To date, Bridgewater has been selected by seven WiMAX service providers around
the world, including a Tier 1 North American service provider. These
selections are expected to lead to network deployments during 2008. The
Company has also executed WiMAX reseller agreements with Alvarion, Motorola
and Nortel.

    Outlook

    For 2008, the Company expects revenue growth to be consistent with the
prior year. Revenue growth in our core CDMA market is expected due to the
expansion of broadband services, the introduction of an integrated solution,
and product expansion to support open access architectures and early
transition toward 4G deployments. The Company anticipates revenue growth and
diversification from Bridgewater's expansion into the 3G GSM and 4G markets
through direct sales and channel partner relationships.
    During 2008, the Company is planning to introduce an integrated system
that will provide hardware, software and services. This new product will
further simplify deployment and expansion of Bridgewater's software in the
network by providing a single integrated platform to customers. The Company
expects to begin introducing this product to selected customers in late 2008,
with broader market deployments beginning in 2009.
    A complete set of audited financial statements and the management's
discussion and analysis for the quarter and year ended December 31, 2007 can
be found at www.bridgewatersystems.com or www.sedar.com.

    Conference Call and Webcast

    A conference call and webcast will be held today, Wednesday, February 27,
2008 at 10:00 am ET to discuss this announcement. The telephone numbers to
access the conference call are 416-644-3420 or 1-800-732-6179. To access the
live webcast, please visit www.bridgewatersystems.com or www.newswire.ca for
directions. Participants will require Windows Media Player(TM) to listen to
the webcast.

    About Bridgewater Systems

    Bridgewater Systems develops subscriber-centric service control
solutions, including access control and policy management software for fixed,
mobile and converged networks. Using Bridgewater solutions, global service
providers can offer personalized services and experiences to their subscribers
by maintaining a real time policy that controls how subscribers interact with
networks, services, and their devices. Vendor-neutral and access network
agnostic, Bridgewater's carrier-class solutions help global service providers
launch new services faster, target them more accurately, and maximize profits
by creating a decision point that brings dynamic subscriber context to
controlling and merchandizing the subscriber interaction with IP-based
services. More than 100 leading service providers around the globe including
Verizon Wireless, Sprint Nextel, Bell Mobility and SmarTone-Vodafone trust
Bridgewater's technology to help them deliver world-class services.
    www.bridgewatersystems.com

    Certain statements in this release constitute forward-looking statements
or forward-looking information within the meaning of applicable securities
laws and are made pursuant to the "safe harbour" provisions of such laws.
Statements related to potential benefits of, and demand for, Bridgewater's
products including statements with respect to the features and benefits that
may be achieved through the use of Bridgewater's products and the relative
position of these products vis-à-vis competitive offerings in the industry are
forward-looking statements which are subject to certain assumptions, risks and
uncertainties. Readers are cautioned not to place undue reliance on such
statements. Risk factors that may cause the actual results, performance or
achievements of Bridgewater to differ materially from the results,
performance, achievements or developments expressed or implied by such
forward-looking statements can be found in the public documents filed by
Bridgewater from time to time with Canadian securities regulatory authorities.
Bridgewater assumes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.


    
    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Statements of Earnings, Comprehensive Earnings and Deficit
    years ended December 31, 2007 and 2006
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------

                                                         2007           2006
                                                -------------- --------------

    Revenue                                     $  39,217,170  $  30,962,357

    Cost of sales                                   6,076,940      5,500,276
    -------------------------------------------------------------------------

    Gross margin                                   33,140,230     25,462,081
    -------------------------------------------------------------------------

    Expenses
      Sales and marketing                          13,502,125     11,598,488
      Research and development                     13,808,659      9,028,444
      General and administration                    2,860,766      2,413,725
      Stock-based compensation                        201,788        193,405
    -------------------------------------------------------------------------
                                                   30,373,338     23,234,062
    -------------------------------------------------------------------------

    Earnings before undernoted items                2,766,892      2,228,019

    Foreign exchange (loss) gain                   (1,160,787)       612,469
    Interest income                                   658,358        500,192
    Loss on disposal of capital assets                      -        (33,434)
    Other income (loss)                                 8,395         (6,019)
    -------------------------------------------------------------------------

    Earnings before income taxes                    2,272,858      3,301,227

    Future income tax recovery                        470,000      7,500,000
    -------------------------------------------------------------------------

    NET EARNINGS AND COMPREHENSIVE EARNINGS         2,742,858     10,801,227

    DEFICIT, BEGINNING OF YEAR                    (18,898,510)   (29,699,737)
    -------------------------------------------------------------------------

    DEFICIT, END OF YEAR                        $ (16,155,652) $ (18,898,510)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per common share - basic       $        0.15  $        0.59

    Net earnings per common share - diluted     $        0.13  $        0.55

    Weighted average number of
     common shares outstanding - basic             18,644,430     18,363,980

    Weighted average number of
     common shares outstanding - diluted           21,024,278     19,748,737



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Balance Sheets
    as at December 31, 2007 and 2006
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------

                                                         2007           2006
                                                -------------- --------------

    CURRENT ASSETS

      Cash and cash equivalents                 $  28,571,239  $  21,194,258
      Note receivable                              10,000,000              -
      Accounts receivable                          10,929,411      4,263,141
      Investment tax credits receivable             1,667,978      1,399,950
      Unbilled receivables                          5,321,664      3,896,853
      Prepaid expenses and other assets               678,245        694,936
      Future income tax asset                       1,993,000      1,435,000
    -------------------------------------------------------------------------

                                                   59,161,537     32,884,138

    FUTURE INCOME TAX ASSET                         6,507,000      6,065,000
    CAPITAL ASSETS                                  3,817,480      3,637,441
    -------------------------------------------------------------------------

                                                $  69,486,017  $  42,586,579
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CURRENT LIABILITIES

      Accounts payable and accrued liabilities      3,223,544      3,818,437
      Deferred revenue                             14,244,055      7,773,170
    -------------------------------------------------------------------------

                                                   17,467,599     11,591,607
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY

      Share capital                                67,477,616     49,382,189
      Contributed surplus                             696,454        511,293
      Deficit                                     (16,155,652)   (18,898,510)
    -------------------------------------------------------------------------

                                                   52,018,418     30,994,972
    -------------------------------------------------------------------------

                                                $  69,486,017  $  42,586,579
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Statements of Cash Flows
    years ended December 31, 2007 and 2006
    (Expressed in Canadian dollars)
    -------------------------------------------------------------------------

                                                         2007           2006
                                                -------------- --------------

    NET INFLOW (OUTFLOW) OF CASH RELATED
     TO THE FOLLOWING ACTIVITIES:

      OPERATING
        Net earnings                            $   2,742,858  $  10,801,227
        Items not affecting cash
          Loss on disposal of assets                        -         33,434
          Stock-based compensation                    201,788        193,405
          Foreign exchange loss (gain)                898,248       (484,273)
          Future income taxes                        (470,000)    (7,500,000)
          Amortization of capital assets            1,309,058        990,894
    -------------------------------------------------------------------------

                                                    4,681,952      4,034,687

        Changes in non-cash operating working
         capital items                             (2,466,426)     4,049,576
    -------------------------------------------------------------------------

                                                    2,215,526      8,084,263
    -------------------------------------------------------------------------

      INVESTING
        Issuance of note receivable               (10,000,000)     -
        Repayment of note receivable                        -     12,500,000
        Purchases of capital assets                (1,489,097)    (2,807,396)
    -------------------------------------------------------------------------

                                                  (11,489,097)     9,692,604
    -------------------------------------------------------------------------

      FINANCING
        Proceeds from issuance of common shares    20,231,180        130,872
        Share issuance costs                       (2,682,380)             -
    -------------------------------------------------------------------------

                                                   17,548,800        130,872
    -------------------------------------------------------------------------

    Foreign exchange (loss) gain
     on cash held in foreign currency                (898,248)       484,273
    -------------------------------------------------------------------------

    NET CASH INFLOW                                 7,376,981     18,392,012

    CASH AND CASH EQUIVALENTS,
     BEGINNING OF YEAR                             21,194,258      2,802,246
    -------------------------------------------------------------------------

    CASH AND CASH EQUIVALENTS,
     END OF YEAR                                $  28,571,239  $  21,194,258
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:

      Cash on hand and bank balances            $   9,474,248  $  10,562,732
      Short-term investments                       19,096,991     10,631,526
    -------------------------------------------------------------------------

      Total cash and cash equivalents           $  28,571,239  $  21,194,258
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Investor Relations, The Equicom Group Inc.,
Vanessa Beresford, vberesford@equicomgroup.com, Craig Armitage, 
carmitage@equicomgroup.com, (416) 815-0700; Bridgewater Systems, Kim Butler,
Chief Financial Officer, kim.butler@bridgewatersystems.com, (613) 591-9104 ext
6023

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