Bridgewater Systems Reports Financial Results for Fiscal 2009

    
    -   Revenue of $66.7 million for fiscal 2009, an increase of 51% over
        prior year

    -   Net earnings of $11.2 million, or $0.44 per share fully diluted,
        compared with net earnings of $2.8 million, or $0.11 per share fully
        diluted, in 2008

    -   Cash and cash equivalents, and short-term investments increased to
        $67.3 million

    -   Company issues guidance for continued growth in 2010
    

OTTAWA, Feb. 26 /CNW/ - Bridgewater Systems (TSX: BWC), the mobile personalization company, today announced financial results for the three and twelve months ended December 31, 2009. This news release contains forward-looking statements. Reference should be made to "Forward-Looking Statements" at the end of this news release. All amounts are stated in Canadian dollars except where otherwise noted.

"Bridgewater delivered solid financial performance in 2009," said Ed Ogonek, CEO of Bridgewater Systems. "This reflects continued robust demand for our technology to support mobile broadband growth, combined with successful operational execution across the company, highlighted by significant new customer wins and key product launches."

"Global mobile data traffic grew significantly in 2009, and this is fuelling demand for our solutions as operators implement network and bandwidth management strategies to reduce costs, while also introducing flexible and dynamic pricing models to better align data revenues with network costs," added Mr. Ogonek. "We are well positioned to capitalize on these trends, and in 2010 are focused on growing our core business, increasing revenue from new products and solutions for 3G and 4G networks, and increasing sales outside North America."

    
    Financial Highlights
    --------------------

    -   Revenue of $66.7 million for fiscal 2009 increased 51%, compared with
        $44.2 million for fiscal 2008. The year-over-year increase mainly
        reflects contribution from new products such as the Home Subscriber
        Server and Policy Controller, license revenue from existing
        customers, as well as revenue from the delivery of integrated
        solutions.

    -   Q4 2009 revenue was $20.7 million, 53% higher than revenue in the
        same period last year.

    -   2009 gross margin was $45.7 million (69% of revenue) versus
        $34.0 million (77% of revenue) in 2008, reflecting increases in
        direct product costs associated with the deployment of integrated
        systems and planned investments in operations support infrastructure,
        as well as internal and subcontracting costs incurred to support the
        increase in professional services engagements.

    -   Total operating expenses in 2009 were $33.2 million, net of
        $2 million of investment tax credit (50% of revenue), compared with
        $33.6 million (76% of revenue) in the same period last year.

    -   Net earnings for 2009 were $11.2 million, or $0.44 per share fully
        diluted, versus $2.8 million, or $0.11 per share fully diluted, in
        the prior year.

    -   Net earnings for Q4 2009 increased to $2.5 million, or $0.10 per
        share fully diluted, compared with $1.7 million, or $0.07 per share
        fully diluted, for the same period in 2008.

    -   Cash and cash equivalents, and short-term investments of
        $67.3 million at December 31, 2009, compared with $50.4 million at
        December 31, 2008.

    Business Highlights
    -------------------

    -   In 2009, Bridgewater continued to successfully penetrate the 3G and
        4G markets globally. In Q4, the Company announced that MetroPCS
        selected Bridgewater for its 4G LTE network. The multi-million dollar
        order includes the Bridgewater(R) Home Subscriber Server and Policy
        Controller. This competitive selection is a strong market validation
        of Bridgewater's unique approach to LTE and deep expertise and
        leadership in control plane transformations. Bell Canada also
        selected the Bridgewater(R) Service Controller for its new national
        3G HSPA network in the quarter. During 2009, the Company expanded 3G
        deployments with several existing customers and expanded customer
        engagements including new engagements with Cox and Mobily.

    -   Bridgewater continued to increase its international customer base in
        2009, adding new customers in Taiwan, the Middle East, Europe, and
        China.

    -   Bridgewater's continued investment in research and development
        resulted in the launch of several new 3G and 4G solutions in 2009
        with a focus on Policy Control and LTE. New policy products and
        solutions included:

        -  PCRF standards compliant Policy Control systems that continue to
           expand the Company's policy market leadership

        -  Bridgewater's award-winning myPolicy(TM) solution for smartphones
           that gives subscribers greater control over their mobile data
           usage

        -  LTE product suite including the Bridgewater(R) Home Subscriber
           Server and Policy Controller. Bridgewater(R) EPC 500 which
           combines both these products into an innovative LTE trial-ready
           system

        -  The Bridgewater(R) ServiceMAX 500, an entry-level WiMAX system for
           small to mid-sized service providers, was also introduced.

        Bridgewater expanded business with Verizon Wireless for its
        WideSpan(R) integrated system, including subscriber data management
        and service control.

    Outlook
    -------
    

With today's release, Bridgewater presented its guidance for 2010. For 2010, the Company is expecting:

    
    -   Revenues of $82 to $92 million

    -   Net earnings of $13 to $16 million
    

Factors supporting Bridgewater's annual outlook include: high revenue visibility due to significant contracts with Tier 1 customers; a large installed customer base in existing and emerging markets; the long-term industry trends of growth in mobile data services and applications; and continued evolution of our business model for delivering products and services to address higher transaction capacity needs.

The complete financial statements and management's discussion and analysis for the three and twelve months ended December 31, 2009 can be found at www.bridgewatersystems.com or at www.sedar.com.

Forward-Looking Statements

Certain statements in this release, including the estimates of future revenues and net earnings provided above, constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. These statements are subject to certain assumptions, risks and uncertainties. Material factors and assumptions used to develop such estimates include:

    
    -   Bridgewater's ability to maintain its relationships and contracts
        with Tier 1 customers;

    -   Bridgewater's visibility into the deployment plans of its major
        customers;

    -   Bridgewater's ability to maintain and grow its installed customer
        base in existing and emerging markets; and

    -   Bridgewater's expectations regarding long-term industry trends in
        growth in mobile data services and applications.
    

Readers are cautioned not to place undue reliance on such statements. These statements are provided to enable external stakeholders to understand Bridgewater's expectations as of the date of this release and may not be appropriate for other purposes.

Actual results, performance, achievements or developments of Bridgewater may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Risk factors that may cause the actual results, performance, achievements or developments of Bridgewater to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in the public documents filed by Bridgewater with Canadian securities regulatory authorities, including, but not limited to Bridgewater's Annual Information Form dated March 31, 2009 and Management's Discussion & Analysis of Financial Condition and Results of Operation dated February 26, 2010, which are available at www.sedar.com, and include the following:

    
    -   Bridgewater operates in highly competitive and continually evolving
        markets, and if it is not able to compete effectively, it may not be
        able to continue to expand its business as expected;

    -   Bridgewater relies on a limited number of customers for a large
        percentage of its revenue, and the loss of, or significant shortfall
        in business from, a key customer could significantly reduce its
        revenue;

    -   Bridgewater must continue to evolve its business models and platforms
        for delivery of products and services to respond to transaction
        capacity needs of its customers;

    -   Bridgewater's engagements with its customers involve complex
        arrangements and the size, timing and contractual terms of orders for
        Bridgewater's products may affect when revenue is recognized;

    -   Bridgewater has a lengthy and variable sales cycle; and

    -   Bridgewater may engage in future acquisitions that could disrupt its
        business and affect its financial condition and operating results.
    

Bridgewater assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by law.

Conference Call and Webcast

A conference call and webcast will be held today, Friday, February 26, 2010 at 8:30 a.m. ET to discuss this announcement. The telephone numbers to access the call are 647-427-7450 or 1-888-231-8191. To access the live webcast, please visit www.bridgewatersystems.com or www.newswire.ca. Participants will require Windows Media Player(TM) to listen to the webcast.

About Bridgewater Systems

Bridgewater Systems, the mobile personalization company, enables service providers to efficiently manage and profit from mobile data services, content and commerce. The company's market leading mobile personalization portfolio provides a real-time, unified view of subscribers including entitlements, devices, networks, billing profiles, preferences and context. Anchored by Bridgewater's Subscriber Data Broker(TM), the portfolio of carrier-grade and standards-based products includes the Bridgewater(R) Service Controller (AAA), the Bridgewater(R) Policy Controller (PCRF) and the Bridgewater(R) Home Subscriber Server (HSS). More than 140 leading service providers including America Movil, Bell Canada, Clearwire, Cox, Hutchison Telecom, Iusacell, Scartel, SmarTone-Vodafone, Sprint, Tata Teleservices, Tatung, Telmex, Telstra, and Verizon Wireless use Bridgewater's solutions to rapidly deliver innovative mobile services to over 150 million subscribers. For more information, visit us at www.bridgewatersystems.com.

Bridgewater, Bridgewater Systems, the Bridgewater Systems logo, WideSpan, Smart Caps, myPolicy, and Subscriber Data Broker are trademarks or registered trademarks of Bridgewater Systems Corporation. All other company, product names and any registered and unregistered trademarks mentioned are used for identification purposes only and remain the exclusive property of their respective owners.

    
    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Statements of Earnings and
    Comprehensive Earnings
    years ended December 31, 2009 and 2008
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------

                                                         2009           2008
                                                -------------- --------------

    Revenue
      Product                                   $  49,372,413  $  28,586,917
      Service and support                          17,303,896     15,591,272
    -------------------------------------------------------------------------
                                                   66,676,309     44,178,189

    Cost of sales                                  20,951,811     10,226,717
    -------------------------------------------------------------------------

    Gross margin                                   45,724,498     33,951,472
    -------------------------------------------------------------------------

    Expenses
      Sales and marketing                          13,880,517     13,372,256
      Research and development                     15,718,157     14,934,992
      General and administration                    5,428,610      3,919,694
      Investment tax credit carryforwards
       recognized                                  (2,000,000)             -
      Bad debt (recovery) expense                    (158,278)     1,183,077
      Stock-based compensation                        370,817        234,827
    -------------------------------------------------------------------------

                                                   33,239,823     33,644,846
    -------------------------------------------------------------------------

    Earnings before undernoted items               12,484,675        306,626

    Foreign exchange (loss) gain                     (189,619)     1,495,851
    Interest and other income                         543,585      1,260,670
    Loss on disposal of property, equipment and
     intangible assets                               (130,820)      (118,159)
    -------------------------------------------------------------------------

    Earnings before income taxes                   12,707,821      2,944,988

    Current income tax expense                      2,000,000              -
    Future income tax (recovery) expense             (496,000)       180,000
    -------------------------------------------------------------------------
    NET EARNINGS AND COMPREHENSIVE EARNINGS     $  11,203,821  $   2,764,988
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per share - basic              $        0.46  $        0.12

    Net earnings per share - diluted            $        0.44  $        0.11

    Weighted average number of shares
     outstanding - basic                           24,179,224     22,653,503

    Weighted average number of shares
     outstanding - diluted                         25,248,147     24,183,094



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Balance Sheets
    as at December 31, 2009 and 2008
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------

                                                         2009           2008
                                                -------------- --------------

    CURRENT ASSETS

      Cash and cash equivalents                 $  53,828,859  $  50,363,771
      Short-term investments                       13,459,190              -
      Accounts receivable                          24,879,197     13,423,994
      Unbilled receivables                          1,360,741        968,363
      Deferred cost of sales                       12,324,813      3,518,085
      Prepaid expenses and other assets             3,229,227      1,735,267
      Future income tax asset                       5,113,000      2,557,000
    -------------------------------------------------------------------------

                                                  114,195,027     72,566,480

    DEFERRED COST OF SALES                                  -      5,525,354
    FUTURE INCOME TAX ASSET                         3,703,000      5,763,000
    PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS       3,604,811      3,351,911
    -------------------------------------------------------------------------

                                                $ 121,502,838  $  87,206,745
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CURRENT LIABILITIES

      Accounts payable and accrued liabilities  $   9,617,441  $   7,305,923
      Deferred revenue                             44,288,403     24,013,113
    -------------------------------------------------------------------------

                                                   53,905,844     31,319,036
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY

      Share capital                                69,872,842     68,444,332
      Contributed surplus                             908,194        834,041
      Deficit                                      (3,184,042)   (13,390,664)
    -------------------------------------------------------------------------

                                                   67,596,994     55,887,709
    -------------------------------------------------------------------------

                                                $ 121,502,838  $  87,206,745
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Statements of Cash Flows
    years ended December 31, 2009 and 2008
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------

                                                         2009           2008
                                                -------------- --------------

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

      OPERATING
        Net earnings                            $  11,203,821  $   2,764,988
        Items not affecting cash
          Bad debt expense                            332,461      1,183,077
          Stock-based compensation                    370,817        234,827
          Foreign exchange loss (gain) on cash
           held in foreign currency                 3,658,289     (1,826,193)
          Loss on disposal of assets                  130,820        118,159
          Future income tax (recovery) expense       (496,000)       180,000
          Amortization of property, equipment and
           intangible assets                        1,494,768      1,400,482
    -------------------------------------------------------------------------

                                                   16,694,976      4,055,340

        Changes in non-cash operating working
         capital items                              5,531,388     11,619,949
    -------------------------------------------------------------------------

                                                   22,226,364     15,675,289
    -------------------------------------------------------------------------

      INVESTING
        Purchase of short-term investments        (13,459,190)             -
        Purchases of property, equipment and
         intangible assets                         (1,778,444)    (1,053,072)
        Deferred cost of sales                              -     (5,525,354)
        Repayment of note receivable                        -     10,000,000
    -------------------------------------------------------------------------

                                                  (15,237,634)     3,421,574
    -------------------------------------------------------------------------

      FINANCING
        Proceeds from issuance of common shares     2,621,796        936,034
        Repurchase of shares under normal course
         issuer bid                                (2,487,149)             -
        Share issuance costs                                -        (66,558)
    -------------------------------------------------------------------------

                                                      134,647        869,476
    -------------------------------------------------------------------------

    Foreign exchange (loss) gain on cash held in
     foreign currency                              (3,658,289)     1,826,193
    -------------------------------------------------------------------------

    NET CASH INFLOW                                 3,465,088     21,792,532

    CASH AND CASH EQUIVALENTS,
      BEGINNING OF PERIOD                          50,363,771     28,571,239
    -------------------------------------------------------------------------

    CASH AND CASH EQUIVALENTS,
     END OF PERIOD                              $  53,828,859  $  50,363,771
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:

      Cash on hand and bank balances            $  17,485,505  $  19,661,902
      Cash equivalents                             36,343,354     30,701,869
    -------------------------------------------------------------------------

      Total cash and cash equivalents           $  53,828,859  $  50,363,771
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Interest received                         $     485,749  $   1,258,824



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Statements of Shareholders' Equity
    years ended December 31, 2009 and 2008
    (expressed in Canadian dollars)
    -------------------------------------------------------------------------
                                         Common Shares           Contributed
                                     Number         Amount         Surplus
                                     ------         ------         -------
    -------------------------------------------------------------------------

    Balance at December 31,
     2007                           22,202,882  $  67,477,616  $     696,454

    Stock-based compensation                 -              -        234,827
    Exercise of stock options          766,819      1,033,274        (97,240)
    Share issuance costs                     -        (66,558)             -
    Net earnings                             -              -              -
    -------------------------------------------------------------------------

    Balance at December 31,
     2008                           22,969,701  $  68,444,332  $     834,041

    Stock-based compensation                 -              -        370,817
    Repurchase of shares under
     normal course issuer bid         (528,485)    (1,489,950)             -
    Exercise of stock options        1,991,252      2,918,460       (296,664)
    Net earnings                             -              -              -
    -------------------------------------------------------------------------

    Balance at December 31, 2009    24,432,468  $  69,872,842  $     908,194
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ----------------------------------------------------------
                                                 Shareholders'
                                     Deficit        Equity
                                     -------        ------
    ----------------------------------------------------------

    Balance at December 31,
     2007                       $  (16,155,652) $  52,018,418

    Stock-based compensation                 -        234,827
    Exercise of stock options                -        936,034
    Share issuance costs                     -        (66,558)
    Net earnings                     2,764,988      2,764,988
    ----------------------------------------------------------

    Balance at December 31,
     2008                       $  (13,390,664) $  55,887,709

    Stock-based compensation                 -        370,817
    Repurchase of shares under
     normal course issuer bid         (997,199)    (2,487,149)
    Exercise of stock options                -      2,621,796
    Net earnings                    11,203,821     11,203,821
    ----------------------------------------------------------

    Balance at December 31,
     2009                       $   (3,184,042) $  67,596,994
    ----------------------------------------------------------
    ----------------------------------------------------------
    

SOURCE BRIDGEWATER SYSTEMS

For further information: For further information: Investor Relations, Kim Butler, Chief Financial Officer, Bridgewater Systems, kim.butler@bridgewatersystems.com, (613) 591-9104 extension 6023; Craig Armitage, The Equicom Group Inc., carmitage@equicomgroup.com, (416) 815-0700 extension 278; Media Relations, Joanne Steinberg, Marketing Director, Bridgewater Systems, joanne.steinberg@bridgewatersystems.com, (613) 591-9104 extension 2032

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