Bridgewater Systems Reports Financial Results for Q1 2010

    
    -   Revenue of $24.5 million for Q1 2010, an increase of 74% over prior
        year

    -   Net earnings of $4.6 million, or $0.19 per share fully diluted,
        compared with net earnings of $2.9 million, or $0.12 per share fully
        diluted, in Q1 2009

    -   Cash and cash equivalents, and short-term investments increased to
        $84.3 million

    -   Updates guidance for 2010
    

OTTAWA, April 29 /CNW/ - Bridgewater Systems (TSX: BWC), the mobile personalization company, today announced financial results for the three months ended March 31, 2010. 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.

"Current customer engagements drove significant increases in revenues and earnings in the first quarter," said Ed Ogonek, CEO of Bridgewater Systems. "Mobile service providers globally are increasingly challenged by the surge in data traffic, which is generating growing interest in our intelligent control solutions, reflected in a robust new business pipeline. We are focused on converting this interest into new customer wins during 2010, particularly outside North America, while expanding our business with current customers as they manage quickly growing mobile data traffic across 3G and 4G networks."

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

    -   Revenue of $24.5 million for Q1 2010 represents an increase of 74%
        compared with $14.0 million for Q1 2009. Product revenue for Q1 2010
        was $18.9 million, an increase of 76%, compared with $10.7 million
        for Q1 2009. Service and support revenue was $5.6 million for Q1 2010
        compared to $3.3 million for Q1 2009, an increase of 71%.

    -   The increase in product revenue primarily reflects the delivery and
        acceptance of the WideSpan systems for Verizon Wireless and the
        advancement of revenue due to an expected transition in the Company's
        business with Verizon Wireless. Going forward, the Company expects
        continued license of its software and solutions by Verizon Wireless
        in a software-based transaction license model as Verizon Wireless
        transitions its requirements to provide for greater hardware platform
        flexibility and to support increased transaction capacity.

    -   Q1 2010 gross margin was $16.3 million (67% of revenue) versus $10.7
        million (76% of revenue) in Q1 2009, reflecting increases in direct
        product costs associated with the delivery of integrated systems,
        investments in operations support infrastructure, as well as
        increased global professional services engagements.

    -   Total operating expenses in Q1 2010 were $9.9 million (40% of
        revenue), net of $0.4 million of investment tax credits, compared
        with $8.2 million (58% of revenue) in the same period last year.

    -   Net earnings before income taxes rose to $5.7 million in Q1 2010,
        versus $2.8 million in Q1 2009.

    -   Net earnings for Q1 2010 increased to $4.6 million, or $0.19 per
        share fully diluted, versus $2.9 million, or $0.12 per share fully
        diluted, in the prior year.

    -   Cash and cash equivalents, and short-term investments grew to $84.3
        million, compared with $67.3 million at December 31, 2009.

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

    -   Selected by Mobily, the largest provider of mobile broadband in Saudi
        Arabia, to provide the Bridgewater(R) Service Controller and Policy
        Controller to manage mobile data growth across its WiMAX, and Wi-Fi
        networks with plans to integrate with the HSPA network.

    -   Bridgewater(R) Policy Controller was deployed by a European property
        of a major global mobile operator group to meet new EU mobile data
        roaming legislation and empower subscribers to personalize and manage
        mobile data usage.

    -   Extended No.1 global policy market leadership in both the overall
        global policy market and in the mobile policy segment according to
        Infonetics Research.

    -   Continued momentum in helping customers transform to 4G with five
        confirmed LTE trials with major operators in Asia Pacific and North
        and South America for the Bridgewater(R) EPC 500 'control-plane-in-a-
        box' system. Bridgewater also showcased industry leading LTE control
        plane interoperability at the Global MultiService Forum testing
        event.

    -   Unveiled new solutions to optimize 3G networks and alleviate
        congestion including Bridgewater's RAN congestion solution and mobile
        data offload solutions.

    Outlook
    -------

    With the release of its Q1 2010 results, Bridgewater updated guidance for
2010. For 2010, the Company is expecting:

    -   Revenues of $85 to $94 million
    -   Net earnings before tax of $14 to $17 million
    -   Net earnings after tax of $10 to $12 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 months ended March 31, 2010 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 March 31, 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, Thursday, April 29, 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 suite 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 150 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
    For the three months ended March 31, 2010 and 2009
    (expressed in Canadian dollars)
    (unaudited)
    -------------------------------------------------------------------------

                                                      Three months ended
                                               ------------------------------
                                                     March 31,      March 31,
                                                         2010           2009
                                               --------------- --------------

    Revenue
      Product                                   $  18,851,979  $  10,737,290
      Service and support                           5,643,892      3,305,807
    -------------------------------------------------------------------------
                                                   24,495,871     14,043,097

    Cost of sales                                   8,180,039      3,323,068
    -------------------------------------------------------------------------

    Gross margin                                   16,315,832     10,720,029
    -------------------------------------------------------------------------

    Expenses
      Sales and marketing                           4,040,311      2,932,558
      Research and development                      5,184,082      3,427,970
      General and administration                    1,025,678      1,501,276
      Investment tax credit carryforwards
       recognized                                    (400,000)             -
      Bad debt (recovery) expense                     (49,929)       223,838
      Stock-based compensation                        115,862         75,488
    -------------------------------------------------------------------------

                                                    9,916,004      8,161,130
    -------------------------------------------------------------------------

    Earnings before undernoted items                6,399,828      2,558,899

    Foreign exchange loss                            (740,319)        (3,697)
    Interest and other income                          72,160        230,023
    Loss on disposal of property, equipment
     and intangible assets                            (22,000)             -
    -------------------------------------------------------------------------

    Earnings before income taxes                    5,709,669      2,785,225

    Current income tax expense                        400,000              -
    Future income tax expense (recovery)              717,000       (100,000)
    -------------------------------------------------------------------------

    NET EARNINGS AND COMPREHENSIVE EARNINGS     $   4,592,669  $   2,885,225
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Net earnings per share - basic              $        0.19  $        0.12

    Net earnings per share - diluted            $        0.18  $        0.12

    Weighted average number of shares
     outstanding - basic                           24,441,881     23,107,823

    Weighted average number of shares
     outstanding - diluted                         25,558,286     24,401,989



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Balance Sheets
    as at March 31, 2010 and December 31, 2009
    (expressed in Canadian dollars)
    (unaudited)
    -------------------------------------------------------------------------

                                                     March 31,   December 31,
                                                         2010           2009
                                               --------------- --------------

    CURRENT ASSETS

      Cash and cash equivalents                 $  76,018,916  $  53,828,859
      Short-term investments                        8,232,449     13,459,190
      Accounts receivable                           9,831,353     24,879,197
      Unbilled receivables                            553,324      1,360,741
      Deferred cost of sales                        9,093,064     12,324,813
      Prepaid expenses and other assets             3,923,485      3,229,227
      Future income tax asset                       3,662,000      5,113,000
    -------------------------------------------------------------------------

                                                  111,314,591    114,195,027

    FUTURE INCOME TAX ASSET                         4,437,000      3,703,000
    PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS       3,337,404      3,604,811
    -------------------------------------------------------------------------

                                                $ 119,088,995  $ 121,502,838
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CURRENT LIABILITIES

      Accounts payable and accrued liabilities  $   5,557,413  $   9,617,441
      Deferred revenue                             41,199,010     44,288,403
    -------------------------------------------------------------------------

                                                   46,756,423     53,905,844
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY

      Share capital                                69,903,009     69,872,842
      Contributed surplus                           1,020,936        908,194
      Retained Earnings (Deficit)                   1,408,627     (3,184,042)
    -------------------------------------------------------------------------

                                                   72,332,572     67,596,994
    -------------------------------------------------------------------------

                                                $ 119,088,995  $ 121,502,838
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Statements of Cash Flows
    For the three months ended March 31, 2010 and 2009
    (expressed in Canadian dollars)
    (unaudited)
    -------------------------------------------------------------------------

                                                      Three months ended
                                               ------------------------------
                                                     March 31,      March 31,
                                                         2010           2009
                                               --------------- --------------

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

    OPERATING
      Net earnings                              $   4,592,669  $   2,885,225
      Items not affecting cash
        Bad debt expense                                    -        223,838
        Stock-based compensation                      115,862         75,488
        Foreign exchange loss (gain) on cash
         held in foreign currency                   1,641,768       (437,144)
        Loss on disposal of assets                     22,000              -
        Future income tax expense (recovery)          717,000       (100,000)
        Amortization of property, equipment and
         intangible assets                            318,572        281,896
    -------------------------------------------------------------------------

                                                    7,407,871      2,929,303

    Changes in non-cash operating working
     capital items                                 11,328,422     (1,687,765)
    -------------------------------------------------------------------------

                                                   18,736,293      1,241,538
    -------------------------------------------------------------------------

    INVESTING
      Receipt of short-term investments             5,226,741              -
      Purchases of property, equipment and
       intangible assets                             (158,256)      (373,867)
      Deferred cost of sales                                -        741,348
    -------------------------------------------------------------------------

                                                    5,068,485        367,481
    -------------------------------------------------------------------------

    FINANCING
      Proceeds from issuance of common shares          27,047      1,736,412
      Repurchase of shares under normal course
       issuer bid                                           -       (208,291)
    -------------------------------------------------------------------------

                                                       27,047      1,528,121
    -------------------------------------------------------------------------

    Foreign exchange (loss) gain on cash held
     in foreign currency                           (1,641,768)       437,144
    -------------------------------------------------------------------------

    NET CASH INFLOW                                22,190,057      3,574,284

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

    CASH AND CASH EQUIVALENTS,
     END OF PERIOD                              $  76,018,916  $  53,938,055
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:

      Cash on hand and bank balances            $  36,819,311  $   9,375,368
      Cash equivalents                             39,199,605     44,562,687
    -------------------------------------------------------------------------

      Total cash and cash equivalents           $  76,018,916  $  53,938,055
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Interest received                         $      52,095  $     226,630



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Statements of Shareholders' Equity
    For the three months ended March 31, 2010
    (expressed in Canadian dollars)
    (unaudited)
    -------------------------------------------------------------------------

                                         Common Shares           Contributed
                                     Number         Amount         Surplus
                                     ------         ------         -------
    -------------------------------------------------------------------------
    Balance at December 31,
     2009                           24,432,468  $  69,872,842  $     908,194
    -------------------------------------------------------------------------

    Stock-based compensation                 -              -        115,862
    Repurchase of shares under
     normal course issuer bid                -              -              -
    Exercise of stock options           15,304         30,167         (3,120)
    Net earnings                             -              -              -
    -------------------------------------------------------------------------

    Balance at March 31, 2010       24,447,772  $  69,903,009  $   1,020,936
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    ----------------------------------------------------------
                              Retained Earnings  Shareholders'
                                    (Deficit)       Equity
                                    ---------       ------
    ----------------------------------------------------------
    Balance at December 31,
     2009                        $  (3,184,042) $  67,596,994
    ----------------------------------------------------------

    Stock-based compensation                 -        115,862
    Repurchase of shares under
     normal course issuer bid                -              -
    Exercise of stock options                -         27,047
    Net earnings                     4,592,669      4,592,669
    ----------------------------------------------------------

    Balance at March 31, 2010    $   1,408,627  $  72,332,572
    ----------------------------------------------------------
    ----------------------------------------------------------
    

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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