RuggedCom reports 193% increase in profitability on revenue growth of 53% for Q3 Fiscal 2009



    
    (All dollar amounts are in US dollars)

    Highlights from the Quarter:
    - 193% increase in Net Income year over year
    - 80% increase in Gross Margin year over year
    - 53% increase in Revenue year over year
    - 38% increase in Purchase Orders year over year
    - Added 98 new customers, up 10% year over year
    

    WOODBRIDGE, ON, Feb. 11 /CNW/ - RuggedCom Inc. ("RuggedCom") (TSX:RCM), a
leading provider of rugged communications networking solutions designed for
mission-critical applications in harsh environments, today announced its
financial results for the third quarter of fiscal 2009, ended December 31,
2008.
    "Our third quarter results reflect consistently strong growth in both
orders and revenues," said Marzio Pozzuoli, President and Chief Executive
Officer. "Improvements in our gross margins and other factors resulted in the
Company achieving another record quarter of earnings."

    Third Quarter Results

    Total revenue for the quarter was $15.8 million, representing the
Company's 18th consecutive record quarter. Revenue increased 53% from the
comparable quarter of a year ago. Revenue growth was primarily driven by
increased sales in the electric power market, which comprised 68% of the
Company's total revenue, and which grew 54% over the same quarter last year.
    Customer purchase orders totaled $15.3 million for the quarter,
representing an increase of 38% over the same quarter last year.
    Gross margin for the quarter was $10.4 million, an increase of 80% over
the comparable period last year. On a percentage of revenue basis, third
quarter gross margin was 65.7%, a significant increase of 9.5 percentage
points over a gross margin of 56.2% for the same period last year. The
increase was due to ongoing efforts to reduce product unit costs, favourable
product and customer mix, in addition to the favourable effects of a weaker
Canadian dollar versus the US dollar.
    Third quarter net income was $4.0 million, representing the Company's
15th consecutive quarter of profitability. This represents a significant
increase over net income of $1.4 million in the third quarter last year. The
increase was mainly due to a combination of revenue growth and significant
increase in gross margin percentage, offset by only a modest increase in
operating expenses. The Company also recorded a provision for income taxes of
$2.0 million with an effective tax rate of 33.2%. This compares to $1.1
million income tax expense in the same period last year.
    Third quarter basic earnings per share were $0.34 compared to $0.12 for
the same quarter last year while fully diluted earnings per share were $0.33
compared to $0.11 for the same quarter last year.
    The Company added 98 new customers in the quarter, an increase of 10%
over the same quarter last year.

    Conference Call and Webcast
    ---------------------------

    Management will host a conference call at 8:30 a.m. (ET) on Thursday,
February 12, 2009. Listeners may attend the conference call by dialing
416-644-3414 or 1-800-733-7571. The live audio webcast can be accessed at
RuggedCom's web site at www.RuggedCom.com. The webcast will also be archived
on the site. A taped rebroadcast will be available to listeners following the
call until 11:59 PM (ET) on February 19, 2009. To access the rebroadcast,
please call 416-640-1917 or 1-877-289-8525 and enter passcode 21293732
followed by the number sign.

    About RuggedCom Inc.
    --------------------

    RuggedCom is a leading provider of rugged communications networking
solutions designed for mission-critical applications in harsh environments.
RuggedCom's technology solutions include Ethernet switches, network routers,
wireless devices, serial servers, media converters, software and professional
services. RuggedCom's products are designed for use in harsh environments such
as those found in electrical power substations and "Smart Grids", intelligent
transportation systems, industrial process control and military applications.
For further information, please visit www.RuggedCom.com.
    The unaudited consolidated interim financial statements and management's
discussion and analysis of the results of operations and financial condition
for the three month and nine month periods ended December 31, 2007 and
December 31, 2008 can be found under the Company's profile at www.sedar.com.
They can also be found in the Investor Relations section of the Company's
website at www.RuggedCom.com.

    
                               RuggedCom Inc.
                  INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                     3rd Quarter ended December 31, 2008



                               RuggedCom Inc.
                         CONSOLIDATED BALANCE SHEETS
                   (in thousands of United States dollars)

                                                   December 31,    March  31,
                                                          2008          2008
                                                    (unaudited)     (audited)
                                                             $             $
                                                             -             -
    Assets
    Current
    Cash and cash equivalents  (note 4)                 43,768         8,037
    Short term investments (note 4)                          -        34,194
    Accounts receivable (note 5)                         7,660         6,602
    Prepaid expenses and other                           1,138         2,188
    Inventories (note 6)                                 5,089         3,446
    Income taxes recoverable                                 -           166
    Future income taxes                                    458           579
                                                  ---------------------------

                                                        58,113        55,212
    Future income taxes                                    502           737
    Property and equipment                               2,453         2,022
    Other assets                                           299           239
                                                  ---------------------------

                                                        61,367        58,210
                                                  ---------------------------
                                                  ---------------------------
    Liabilities
    Current
    Accounts payable and accrued liabilities             5,127         4,196
    Current portion of warranty liability                  505           569
    Income taxes payable                                 1,878             -
    Current portion of deferred income                      48             -
    Current portion of obligations under
     capital leases                                        167           269
                                                  ---------------------------

                                                         7,725         5,034
    Warranty liability                                     663           504
    Deferred income                                         21             -
    Obligations under capital leases                        65           213
    Leasehold inducements                                   13            39
                                                  ---------------------------

                                                         8,487         5,790
                                                  ---------------------------
    Shareholders' Equity
    Capital stock (note 7)                              46,718        46,384
    Contributed surplus (note 8)                         1,001           684

    Accumulated other comprehensive
     income (loss) (note 9)                             (7,083)        2,018
    Retained earnings                                   12,244         3,334
                                                  ---------------------------
                                                         5,161         5,352
                                                  ---------------------------
                                                        52,880        52,420
                                                  ---------------------------
                                                        61,367        58,210
                                                  ---------------------------
                                                  ---------------------------

    Contingent liabilities (note 10)
    See accompanying notes to interim consolidated financial statements.



                               RuggedCom Inc.
     CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS (DEFICIT)
    (in thousands of United States dollars except per share information)
                                 (unaudited)

                                 3 month     3 month     9 month     9 month
                                  period      period      period      period
                                   ended       ended       ended       ended
                                December    December    December    December
                                31, 2008    31, 2007    31, 2008    31, 2007
                                       $           $           $           $
                                       -           -           -           -

    Revenue                       15,821      10,312      42,957      27,713
    Cost of goods sold             5,420       4,520      15,897      12,390
                              -----------------------------------------------

    Gross margin                  10,401       5,792      27,060      15,323
                              -----------------------------------------------
    Operating expenses
    Research and development
     - net of investment
     tax credits of $139
     (2007 - $113, 9 month
     2008 - $638, 2007 -$573)      1,052         732       2,915       2,041
    Sales and marketing            2,666       1,777       7,743       5,367
    General and administrative       751       1,137       3,256       3,656
    Amortization                     271         214         859         598
                              -----------------------------------------------
                                   4,740       3,860      14,773      11,662
                              -----------------------------------------------
    Operating income               5,661       1,932      12,287       3,661
    Net interest income              303         484       1,131         773
                              -----------------------------------------------
    Earnings before income
     taxes                         5,964       2,416      13,418       4,434
                              -----------------------------------------------
    Income taxes (note 15)
    Current                        1,829       1,043       4,357       1,781
    Future                           153          16         151          78
                              -----------------------------------------------

                                   1,982       1,059       4,508       1,859
                              -----------------------------------------------
    Net earnings for the period    3,982       1,357       8,910       2,575

    Retained earnings (deficit)
     - Beginning of period         8,262        (312)      3,334      (1,530)
                              -----------------------------------------------
    Retained earnings
     - End of period              12,244       1,045      12,244       1,045
                              -----------------------------------------------
                              -----------------------------------------------

    Net earnings per common
     share (note 11)
    Basic                          $0.34       $0.12       $0.76       $0.27
    Diluted                        $0.33       $0.11       $0.72       $0.26

    Basic weighted average
     number of common
     shares outstanding       11,798,435  11,510,060  11,760,669   9,624,458
    Diluted weighted average
     number of common
     shares outstanding       12,251,346  12,286,253  12,296,445  10,478,209

    See accompanying notes to interim consolidated financial statements.



                               RuggedCom Inc.
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                  (in thousands of United States dollars )
                                 (unaudited)


                                 3 month     3 month     9 month     9 month
                                  period      period      period      period
                                   ended       ended       ended       ended
                                December    December    December    December
                                31, 2008    31, 2007    31, 2008    31, 2007
                                       $           $           $           $
                                       -           -           -           -

    Net earnings for the period    3,982       1,357       8,910       2,575
    Unrealized foreign
     currency translation
     gain (loss) (note 9)         (7,067)        164      (9,101)      3,904
                              -----------------------------------------------
    Comprehensive income
     (loss) - For the period      (3,085)      1,521        (191)      6,479
                              -----------------------------------------------
                              -----------------------------------------------

    See accompanying notes to interim consolidated financial statements.



                               RuggedCom Inc.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                   (in thousands of United States dollars)
                                 (unaudited)

                                 3 month     3 month     9 month     9 month
                                  period      period      period      period
                                   ended       ended       ended       ended
                                December    December    December    December
                                31, 2008    31, 2007    31, 2008    31, 2007
                                       $           $           $           $
                                       -           -           -           -
    Cash provided by (used in)
    Operating activities
    Net earnings for the
     period                        3,982       1,357       8,910       2,575
    Non-cash items
      Amortization of
       property and equipment        253         202         808         535
      Amortization of other
       assets                         18          12          51          63
      Gain on disposal of
       property and equipment          -         (13)          -         (16)
      Future income taxes            153          16         151          78
      Accretion and
       cumulative dividends
       on preferred shares             -           -           -         148
      Stock based compensation       139         108         475         311
      Warranty liability             104          80         295         239
      Leasehold inducements           (7)          1         (23)          3
      Net change in non-
       cash working
       capital (note 14)             (29)       (647)         87      (1,038)
                              -----------------------------------------------
                                   4,613       1,116      10,754       2,898
                              -----------------------------------------------
    Investing activities
    Disposal of (additions to)
     short term investments            -           -      34,787     (33,359)
    Proceeds from disposal
     of property and equipment         -          24           -          35
    Additions to property
     and equipment                  (619)       (283)     (1,632)       (615)
    Additions to other assets        (63)        (57)       (160)       (102)
                              -----------------------------------------------
                                    (682)       (316)     32,995     (34,041)
                              -----------------------------------------------
    Financing activities
    Repayment of obligations
     under capital leases            (56)        (68)       (196)       (186)
    Issuance of common shares          3          88         176      39,691
    Share issuance costs               -           -           -      (3,802)
                              -----------------------------------------------
                                     (53)         20         (20)     35,703
                              -----------------------------------------------
    Effect of foreign currency
     exchange rates on cash
     and cash equivalents         (5,785)         22      (7,998)      1,350
                              -----------------------------------------------
    Increase (decrease) in
     cash and cash equivalents
     during the period            (1,907)        842      35,731       5,910
    Cash and cash equivalents
     - Beginning of period        45,675       8,384       8,037       3,316
                              -----------------------------------------------
    Cash and cash equivalents
     - End of period (note 14b)   43,768       9,226      43,768       9,226
                              -----------------------------------------------
                              -----------------------------------------------

    See accompanying notes to interim consolidated financial statements.
    





For further information:

For further information: Roy Dalton, Chief Financial Officer, RuggedCom
Inc., Tel: (905) 856-5288, Email: Investor@RuggedCom.com

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