RuggedCom reports 55 per cent revenue growth for third quarter of fiscal 2008



    /NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN
    THE U.S./

    (All dollar amounts are in US dollars)

    
    Highlights from the Quarter:
    -   Record revenue of $10.3 million, up 55% year over year
    -   Record purchase orders of $11.1 million, up 79% year over year
    -   Gross margin of $5.8 million, up 56% year over year
    -   Net income of $1.4 million, up 108% year over year
    -   Added 244 new customers fiscal year to date
    

    WOODBRIDGE, ON, Feb. 6 /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 2008, ended December 31,
2007.
    "Our latest quarterly results reflect the Company's continued success in
growing both top and bottom lines while maintaining strong gross margins,"
said Marzio Pozzuoli, President and Chief Executive Officer.

    Third Quarter Results

    Total revenue for the quarter was $10.3 million, representing the
Company's 14th consecutive record quarter. Revenue increased 55% from the
comparable quarter of a year ago. Revenue growth was primarily driven by
increased sales in RuggedCom's electric power market, which comprised 68% of
the Company's total revenue, and which grew 60% over the same quarter last
year.
    Customer purchase orders totaled $11.1 million for the quarter, another
company record, representing an increase of 79% over the same quarter last
year.
    Gross margin for the quarter was $5.8 million, an increase of 56% over
the comparable period last year. On a percentage basis, third quarter gross
margin was 56.2%, a slight increase of 0.4 percentage points over 55.8% for
the same period last year.
    Third quarter net income was $1.4 million, representing the Company's
11th consecutive quarter of profitability. This represents a 108% increase
over net income of $0.7 million in the third quarter last year. The increase
was due to a combination of revenue growth, a slight increase in gross
margins, as well as relatively lower increases in research & development and
sales and marketing expenses for the quarter. In addition, the Company
recorded $0.5 million of interest income for the quarter compared to
$0.1 million of interest expense in the same quarter last year. The Company
also recorded a provision for income taxes of $1.1 million resulting from an
effective tax rate of 43.8%. This compares to $0.2 million of income tax
expense in the same period last year. The relatively high effective rate was
due to a one-time adjustment to future income taxes to reflect the new
proposed tax rates announced by the federal government in October 2007.
Earnings per basic share were $0.12 compared to $0.12 for the same quarter
last year while earnings per diluted share were $0.11 compared to $0.09 for
the same quarter last year.
    The Company added 89 new customers in the quarter for a fiscal
year-to-date total of 244 new customers.

    Conference Call and Webcast
    ---------------------------
    Management will host a conference call at 8:30 a.m. (ET) on Thursday,
February 7, 2008. Listeners may attend the conference call by dialing
416-644-3422 or 1-800-595-8550. 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 14, 2008. To access the rebroadcast,
please call 416-640-1917 or 1-877-289-8525 and enter passcode 21260461
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, 2006 and
December 31, 2007 can be found under the Company's profile at www.sedar.com.


    
                               RuggedCom Inc.
                  CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                     3rd Quarter ended December 31, 2007



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

                                                      December         March
                                                      31, 2007      31, 2007
                                                    (unaudited)     (audited)
                                                             $             $
                                                             -             -

    Assets
    Current
    Cash and cash equivalents (note 5)                   9,226         3,316
    Short term investments (note 5)                     35,408             -
    Accounts receivable (note 6)                         6,382         4,002
    Prepaid expenses and other                           1,929         1,420
    Inventories                                          3,291         2,259
    Future income taxes                                    199            70
                                                  ---------------------------

                                                        56,435        11,067
    Future income taxes                                  1,275            42
    Property and equipment                               1,963         1,559
    Other assets                                           219           157
                                                  ---------------------------

                                                        59,892        12,825
                                                  ---------------------------
                                                  ---------------------------

    Liabilities
    Current
    Accounts payable and accrued liabilities             6,372         3,451
    Current portion of warranty liability                  586           432
    Income taxes payable                                   176           809
    Current portion of obligations under
     capital lease                                         283           206
                                                  ---------------------------

                                                         7,417         4,898
    Warranty                                               580           354
    Obligations under capital lease                        286           376
    Leasehold inducements                                   39            31
    Preferred shares (note 7)                                -         4,195
                                                  ---------------------------

                                                         8,322         9,854
                                                  ---------------------------

    Shareholders' Equity
    Capital stock (note 8)                              45,995         3,211
    Accumulated other comprehensive income
     (note 9)                                            3,850           (54)
    Contributed surplus (note 10)                          680         1,344
    Retained earnings (deficit)                          1,045        (1,530)
                                                  ---------------------------

                                                        51,570         2,971
                                                  ---------------------------

                                                        59,892        12,825
                                                  ---------------------------
                                                  ---------------------------

    Contingent liabilities (note 11)
    See accompanying notes to consolidated financial statements.



                               RuggedCom Inc.
               CONSOLIDATED STATEMENTS OF EARNINGS AND 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, 2007    31, 2006    31, 2007    31, 2006
                                       $           $           $           $
                                       -           -           -           -

    Revenue                       10,312       6,638      27,713      19,195
    Cost of goods sold             4,520       2,933      12,390       8,833
                              -----------------------------------------------

    Gross margin                   5,792       3,705      15,323      10,362
                              -----------------------------------------------

    Operating expenses
    Research and development -
     net of scientific
     research and experimental
     development investment tax
     credits of $113 (9 month
     2007 -$573, 2006 - $NIL)        732         513       2,041       1,524
    Sales and marketing            1,777       1,410       5,367       3,802
    General and administrative     1,137         595       3,656       1,827
    Amortization                     214         156         598         393
                              -----------------------------------------------

                                   3,860       2,674      11,662       7,546
                              -----------------------------------------------

    Operating income               1,932       1,031       3,661       2,816
    Interest income (expense)        484        (140)        773        (435)
                              -----------------------------------------------

    Income before income taxes     2,416         891       4,434       2,381
                              -----------------------------------------------

    Income taxes (note 16)
    Current                        1,043         238       1,781         703
    Future                            16           -          78           -
                              -----------------------------------------------

                                   1,059         238       1,859         703
                              -----------------------------------------------

    Net income for the period      1,357         653       2,575       1,678
                              -----------------------------------------------

    Deficit - Beginning
     of period                      (312)     (3,275)     (1,530)     (4,300)
                              -----------------------------------------------

    Retained earnings (deficit)
     - End of period               1,045      (2,622)      1,045      (2,622)
                              -----------------------------------------------
                              -----------------------------------------------

    Net earnings per share
     (Note 12)
    Basic                     $     0.12  $     0.12  $     0.27  $     0.31
    Diluted                   $     0.11  $     0.09  $     0.26  $     0.23

    Basic weighted average
     number of common shares
     outstanding              11,510,060   5,345,717   9,624,458   5,328,703
    Diluted weighted average
     number of common shares
     outstanding              12,286,253   9,207,833  10,478,209   9,189,440

    See accompanying notes to consolidated financial statements.



                               RuggedCom Inc.
               CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                   (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, 2007    31, 2006    31, 2007    31, 2006
                                       $           $           $           $
                                       -           -           -           -

    Net income for the period      1,357         653       2,575       1,678
    Foreign currency
     translation gain (loss)         164         (63)      3,904         (63)
                              -----------------------------------------------
    Comprehensive income           1,521         590       6,479       1,615
                              -----------------------------------------------
                              -----------------------------------------------



                               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, 2007    31, 2006    31, 2007    31, 2006
                                       $           $           $           $
                                       -           -           -           -

    Cash provided by (used in)
    Operating activities
    Net income for the period      1,357         653       2,575       1,678
    Non-cash items
      Amortization of property
       and equipment                 202         120         535         318
      Amortization of other
       assets                         12          36          63          75
      Gain on disposal of
       property and equipment        (13)          -         (16)          -
      Future income taxes             16           -          78           -
      Accretion and cumulative
       dividends on preferred
       shares                          -         139         148         421
      Stock based compensation       108          61         311         143
      Warranty                        80           3         239         130
      Leasehold inducements            1           3           3           9
      Net change in non-cash
       working capital
       (note 15)                    (647)        238      (1,038)         33
                              -----------------------------------------------

                                   1,116       1,253       2,898       2,807
                              -----------------------------------------------

    Investing activities
    Additions to short term
     investments                       -           -     (33,359)          -
    Proceeds from disposal of
     property and equipment           24           -          35           -
    Additions to property and
     equipment                      (283)       (186)       (615)       (499)
    Additions to other assets        (57)        (16)       (102)        (31)
                              -----------------------------------------------

                                    (316)       (202)    (34,041)       (530)
                              -----------------------------------------------

    Financing activities
    Decrease in long-term debt         -         (69)          -         (87)
    Repayment of obligations
     under capital lease             (68)        (35)       (186)        (81)
    Issuance of common shares         88           -      39,691          65
    Share issuance costs               -           -      (3,802)          -
                              -----------------------------------------------

                                      20        (104)     35,703        (103)
                              -----------------------------------------------

    Effect of exchange rates
     on cash                          22        (103)      1,350         (70)
                              -----------------------------------------------

    Increase in cash and cash
     equivalents during the
     period                          842         844       5,910       2,104
    Cash and cash equivalents
     - Beginning of period         8,384       1,931       3,316         671
                              -----------------------------------------------

    Cash and cash equivalents
     - End of period               9,226       2,775       9,226       2,775
                              -----------------------------------------------
                              -----------------------------------------------

    Supplementary information
    Interest paid             $       23  $       15  $      101  $       41
    Income taxes paid         $      159  $        -  $    1,427  $        -
    





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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RUGGEDCOM INC.

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