RuggedCom reports record purchase orders and 25% revenue growth for Q1 Fiscal
2011

    
    (All dollar amounts are in US dollars)

    Highlights from the Quarter:
    -  18% increase in Purchase Orders year over year, a new company record
    -  25% increase in Revenue year over year
    -  31% increase in Gross Margin year over year
    -  36% increase in Net Income year over year
    -  Added 92 new customers
    

CONCORD, ON, Aug. 12 /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 first quarter of fiscal 2011, ended June 30, 2010.

"Sixty percent order growth in the transportation market was a significant factor in the Company delivering another record quarter in total booked orders." said Marzio Pozzuoli, President and Chief Executive Officer. "Revenues were positively impacted by a record quarter for both the electric power and transportation markets with strong gross margins also contributing to the quarter's performance."

First Quarter Results

Total revenue for the quarter was $20.0 million, representing an increase of 25% from the comparable quarter a year ago. Revenue growth was primarily driven by increased sales in the electric power and transportation markets, which grew 29% and 38% respectively, over the same quarter last year.

The Company booked record customer purchase orders totaling $21.2 million for the quarter, representing an increase of 18% over the same quarter last year.

Gross margin for the quarter was $11.9 million, an increase of 31% over the comparable period last year. On a percentage of revenue basis, first quarter gross margin was 59.7%, an increase of 3.0 percentage points over a gross margin of 56.7% for the same period last year.

First quarter net income was $1.2 million, a 36% increase over the comparable period a year ago. The increase was due to a combination of improved gross margins combined with favourable foreign exchange gains realized in the quarter as compared to foreign exchange losses incurred in the year ago period. The Company also recorded a provision for income taxes of $1.2 million for an effective tax rate of 49.7%. This compares to $0.6 million income tax expense in the same period last year with an effective tax rate of 38.8%.

First quarter basic earnings per share were $0.10 compared to $0.07 for the same quarter last year while fully diluted earnings per share were $0.10 compared to $0.07 for the same quarter last year.

The Company added 92 new customers in the quarter for a total of 451 customers placing orders in the quarter.

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

Management will host a conference call at 8:30 a.m. (ET) on Thursday, August 12, 2010. Listeners may attend the conference call by dialing 647-427-7450 or 1-888-231-8191. 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 August 19, 2010. To access the rebroadcast, please call 416-849-0833 or 1-800-642-1687 and enter passcode 88633501 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 periods ended June 30, 2010 and June 30, 2009 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.
                  CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                       1st Quarter ended June 30, 2010

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

                                               June 30, 2010  March 31, 2010
                                                  (unaudited)       (audited)
                                                           $               $
                                                           -               -
    Assets
    Current
    Cash and cash equivalents (note 5)                32,878          33,140
    Accounts receivable (note 6)                      11,989          13,494
    Prepaid expenses and other                         1,854           1,825
    Inventories (note 7)                              11,381          10,497
    Income taxes recoverable                             240           1,036
    Future income taxes                                  600             637
                                                 ----------------------------
                                                      58,942          60,629
    Future income taxes                                  222             431
    Severance pay fund                                   498             520
    Property and equipment                            11,010          11,372
    Goodwill (note 4)                                  1,839           1,928
    Intangible assets                                 10,460          11,373
                                                 ----------------------------
                                                      82,971          86,253
                                                 ----------------------------
                                                 ----------------------------

    Liabilities
    Current
    Accounts payable and accrued liabilities           6,633           7,618
    Current portion of warranty liability                486             604
    Income taxes payable                                  97             280
    Current portion of deferred income                    24              99
    Current portion of lease costs                        57              26
    Current portion of obligations under
     capital leases                                       96             105
                                                 ----------------------------
                                                       7,393           8,732
    Warranty liability                                   400             413
    Deferred income                                       40              32
    Severance payable                                    534             558
    Obligations under capital leases                      70              95
    Lease costs payable                                  260             265
                                                 ----------------------------
                                                       8,697          10,095
                                                 ----------------------------

    Shareholders' Equity
    Capital stock (note 8)                            48,976          48,886
    Contributed surplus (note 10)                      2,907           2,538

    Accumulated other comprehensive
     income (loss) (note 9)                            1,339           4,887
    Retained earnings                                 21,052          19,847
                                                 ----------------------------
                                                      22,391          24,734
                                                 ----------------------------
                                                      74,274          76,158
                                                 ----------------------------
                                                      82,971          86,253
                                                 ----------------------------
                                                 ----------------------------

    See accompanying notes to consolidated interim financial statements.



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

                                              3 month period  3 month period
                                               ended June 30,  ended June 30,
                                                        2010            2009
                                                           $               $
                                                           -               -

    Revenue                                           19,990          16,017
    Cost of goods sold                                 8,064           6,940
                                                -----------------------------

    Gross margin                                      11,926           9,077
                                                -----------------------------

    Operating expenses
    Research and development                           2,918           2,025
    Sales and marketing                                3,989           2,978
    General and administrative                         2,401           1,953
    Investment tax credits                              (499)           (187)
    Loss (gain) on foreign exchange                     (533)            531
    Amortization                                       1,287             393
                                                -----------------------------

                                                       9,563           7,693
                                                -----------------------------

    Operating income                                   2,363           1,384
    Net interest income                                   31              63
                                                -----------------------------

    Income before income taxes                         2,394           1,447
                                                -----------------------------

    Provision for income taxes (note 11)
    Current                                              985             505
    Future                                               204              57
                                                -----------------------------

                                                       1,189             562
                                                -----------------------------

    Net income for the period                          1,205             885

    Retained earnings - Beginning of period           19,847          15,662
                                                -----------------------------

    Retained earnings - End of period                 21,052          16,547
                                                -----------------------------
                                                -----------------------------

    Net earnings per common share (note 13)
    Basic                                         $     0.10      $     0.07
    Diluted                                       $     0.10      $     0.07

    Basic weighted average number of common
     shares                                       12,147,149      11,896,306
    Diluted weighted average number of common
     shares                                       12,399,988      12,623,918

    See accompanying notes to consolidated financial statements.



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

                                              3 month period  3 month period
                                               ended June 30,  ended June 30,
                                                        2010            2009
                                                           $               $
                                                           -               -

    Net income for the period                          1,205             885
    Unrealized foreign currency translation
     gain (loss) (note 9)                             (3,548)          4,570
                                                -----------------------------

    Comprehensive income for the period               (2,343)          5,455
                                                -----------------------------
                                                -----------------------------

    See accompanying notes to consolidated interim financial statements



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

                                              3 month period  3 month period
                                               ended June 30,  ended June 30,
                                                        2010            2009
                                                           $               $
                                                           -               -

    Cash provided by (used in)
    Operating activities
    Net income for the period                          1,205             885
    Non-cash items
      Amortization of property and equipment             654             302
      Amortization of other assets                       634              91
      Future income taxes                                204              57
      Stock-based compensation                           402             278
      Warranty liability                                 (89)             29
      Lease costs                                         42              99
    Net change in non-cash working capital
     (note 12 (a))                                      (735)         (3,899)
                                                -----------------------------

                                                       2,317          (2,158)
                                                -----------------------------

    Investing activities
    Additions to property and equipment                 (818)           (553)
    Additions to other assets                           (228)           (652)
                                                -----------------------------

                                                      (1,046)         (1,205)
                                                -----------------------------

    Financing activities
    Repayment of obligations under capital leases        (26)            (46)
    Issuance of common shares                             57           1,706
                                                -----------------------------

                                                          31           1,660
                                                -----------------------------

    Effect of exchange rates on cash                  (1,563)          3,709
                                                -----------------------------

    Increase (decrease) in cash and cash
     equivalents                                        (261)          2,006
    Cash and cash equivalents -
     Beginning of period                              33,140          45,099
                                                -----------------------------

    Cash and cash equivalents -
     End of period (note 12(b))                       32,879          47,105
                                                -----------------------------
                                                -----------------------------

    See accompanying notes to consolidated financial statements.
    

SOURCE RUGGEDCOM INC.

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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