Bridgewater Systems Reports Q3 2009 Results and Updates Financial Outlook for
2009

    
    -   Q3 Revenue: $15.8 million, an increase of 53% over prior year

    -   Q3 Net Earnings: $1.7 million, or $0.07 per share fully diluted,
        compared with net earnings of $0.5 million, or $0.02 per share fully
        diluted, in Q3 2008

    -   Cash, cash equivalents and short-term investments increased to
        $61.5 million
    

OTTAWA, Nov. 5 /CNW/ - Bridgewater Systems (TSX: BWC), the mobile personalization company, today announced its financial results for the three and nine months ended September 30, 2009. All amounts are stated in Canadian dollars unless otherwise noted.

"The Company delivered strong financial performance in the third quarter, highlighted by significant revenue and earnings growth over the prior year," said Ed Ogonek, CEO of Bridgewater Systems. "In addition to continued success in our core markets, we made important progress in the third quarter with our strategy to expand into the 4G market. We introduced a comprehensive product suite for the LTE market and built on our early leadership with WiMAX operators.

"Supported by a strong financial position, high revenue visibility, and our new business pipeline, we are increasing investments in growth initiatives in the coming quarters," added Mr. Ogonek. "These investments are aimed at building our operations support infrastructure, as well as accelerating our expansion in certain geographic markets and continuing our 4G product development. We believe these investments position Bridgewater to capitalize on the substantial growth in next-generation mobile data services."

Financial Highlights

    
    -   Q3 2009 revenue increased 53% to $15.8 million, compared with
        $10.3 million for the same period last year. The year-over-year
        increase mainly reflects license revenue from a significant project,
        as well as revenue from the delivery of the WideSpan systems to
        Verizon Wireless and Cricket Communications.

    -   Revenue for the first nine months of 2009 was $45.9 million, 50%
        higher than revenue in the first nine months of fiscal 2008.

    -   Q3 2009 gross margin was $10.1 million (64% of revenue) versus
        $7.7 million (75% of revenue) in Q3 2008, reflecting increases in
        direct product costs and anticipated 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 Q3 2009 were $8.5 million (54% of
        revenue), compared with $7.5 million (73% of revenue) in the same
        period last year.

    -   Net earnings for Q3 2009 were $1.7 million, or $0.07 per share fully
        diluted, compared to $0.5 million, or $0.02 per share fully diluted,
        in the prior year period.

    -   Net earnings for the year-to-date period increased to $8.7 million,
        or $0.35 per share fully diluted, compared with $1.1 million, or
        $0.04 per share fully diluted, for the same period in 2008.

    -   Increased cash, cash equivalents and short-term investments to
        $61.5 million, compared with $50.4 million at December 31, 2008.
    

Business Highlights

    
    -   Unveiled Bridgewater's LTE product suite for the Evolved Packet Core,
        including the Bridgewater(R) Home Subscriber Server and Policy
        Controller. These solutions help service providers rapidly trial and
        launch LTE services and manage mobile data traffic, subscribers,
        applications, and devices. Several global trials with major service
        providers are in the planning and implementation stages.

    -   Expanded the Company's 4G partner and interoperability ecosystem for
        LTE and WiMAX, Some of the companies in our ecosystem include:
        Starent Networks, Alvarion, Motorola, NEC, Hitachi, Samsung,
        WiChorus, and Verint.

    -   Extended global market leadership in WiMAX with five new wins in the
        quarter, bringing the total number of WiMAX customers to 38.
        Bridgewater announced selection by Global Mobile, one of Taiwan's
        leading 4G operators. The Company also announced selection by 4
        US-based WiMAX service providers to accelerate the launch of 4G
        broadband services to rural communities as part of broadband stimulus
        initiatives. In addition, Bridgewater received United States
        Department of Agriculture Rural Utility Service acceptance for its
        WiMAX solutions.

    -   Awarded approximately US$18.8 million in additional orders by Verizon
        Wireless for its WideSpan(R) integrated system, including subscriber
        data management and service control, to manage the rapid growth in
        the company's popular mobile data services.

    -   Won xchange magazine's Best of 4G award in the Best Mobile Internet
        Application category for Bridgewater's myPolicy(TM) solution for the
        Apple(R) iPhone and Research in Motion's BlackBerry(R).
    

Outlook

Based on its year-to-date performance, Bridgewater increased its annual guidance to:

    
    -   Revenues of $62 to $64 million
    -   Net earnings of $9.5 to $10.0 million.
    

Factors supporting Bridgewater's annual outlook include: high revenue visibility due to significant multi-year contracts with Tier 1 customers; a large installed customer base in existing and emerging markets; long-term industry trends, particularly the growth in mobile data services and applications.

The complete financial statements and management's discussion and analysis for the three and nine months ended September 30, 2009 can be found at www.bridgewatersystems.com or at www.sedar.com.

Conference Call and Webcast

A conference call and webcast will be held today, Thursday, November 5, 2009, at 8:30 am EDT to discuss this announcement. The telephone numbers to access the call are 416-644-3432 or 1-877-974-0446. 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. 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.

Certain statements in this release, including the guidance provided above, constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws and are made pursuant to the "safe harbour" provisions of such laws. These statements are subject to certain assumptions, risks and uncertainties. Readers are cautioned not to place undue reliance on such statements. Risk factors that may cause the actual results, performance, achievements or developments of the Company to differ materially from the results, performance, achievements or developments expressed or implied by such forward-looking statements can be found in the public documents filed by the Company with Canadian securities regulatory authorities. In particular, actual results could differ materially from those expressed in any forward-looking statements. For a list of risk factors, please refer to Bridgewater's Annual Information Form dated March 31, 2009. The Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

    
    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Statements of Earnings and
    Comprehensive Earnings
    (expressed in Canadian dollars)
    (unaudited)
    -------------------------------------------------------------------------

                          Three months ended           Nine months ended
                      --------------------------- ---------------------------
                      September 30, September 30, September 30, September 30,
                              2009          2008          2009          2008
                      ------------- ------------- ------------- -------------
                      -------------               -------------
    Revenue
      Product         $ 11,550,556  $  5,963,509  $ 33,967,118  $ 19,667,267
      Service and
       support           4,218,772     4,330,185    11,979,795    10,987,453
    -------------------------------------------------------------------------
                        15,769,328    10,293,694    45,946,913    30,654,720

    Cost of sales        5,636,789     2,555,297    13,043,502     6,609,576
    -------------------------------------------------------------------------

    Gross margin        10,132,539     7,738,397    32,903,411    24,045,144
    -------------------------------------------------------------------------

    Expenses
      Sales and
       marketing         3,408,637     3,329,261     9,623,026     9,825,762
      Research and
       development       3,863,831     3,215,931    11,045,295    11,599,745
      General and
       administration    1,100,750       920,117     4,204,437     2,867,302
      Bad debt
       (recovery) expense        -        (9,854)     (263,897)       57,612
      Stock-based
       compensation        100,598        72,050       271,086       168,818
    -------------------------------------------------------------------------

                         8,473,816     7,527,505    24,879,947    24,519,239
    -------------------------------------------------------------------------

    Earnings (loss)
     before undernoted
     items               1,658,723       210,892     8,023,464      (474,095)

    Foreign exchange
     (loss) gain          (225,009)       76,922      (130,401)      627,553
    Interest and
     other income           74,095       275,595       472,989       987,097
    -------------------------------------------------------------------------

    Earnings before
     income taxes        1,507,809       563,409     8,366,052     1,140,555

    Future income tax
     recovery (expense)    143,000       (80,000)      313,000       (80,000)
    -------------------------------------------------------------------------

    NET EARNINGS AND
     COMPREHENSIVE
     EARNINGS         $  1,650,809  $    483,409  $  8,679,052  $  1,060,555
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings
     per share -
     basic            $       0.07  $       0.02  $       0.36  $       0.05

    Net earnings
     per share -
     diluted                  0.07          0.02          0.35          0.04

    Weighted average
     number of shares
     outstanding -
     basic              24,359,491    22,758,098    23,940,792    22,546,214

    Weighted average
     number of shares
     outstanding -
     diluted            25,237,721    24,208,862    24,909,273    24,216,263



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Balance Sheets
    (expressed in Canadian dollars)
    (unaudited)
    -------------------------------------------------------------------------

                                                 September 30,   December 31,
                                                         2009           2008
                                                -------------- --------------
                                                --------------
    CURRENT ASSETS

      Cash and cash equivalents                 $  43,326,794  $  50,363,771
      Short-term investments                       18,166,784              -
      Accounts receivable                          16,552,336     13,423,994
      Unbilled receivables                          8,336,658        968,363
      Deferred cost of sales                        8,334,939      3,518,085
      Prepaid expenses and other assets             5,864,554      1,735,267
      Future income tax asset                       2,567,000      2,557,000
    -------------------------------------------------------------------------

                                                  103,149,065     72,566,480

    DEFERRED COST OF SALES                                  -      5,525,354
    FUTURE INCOME TAX ASSET                         6,066,000      5,763,000
    CAPITAL ASSETS                                  4,124,488      3,351,911
    -------------------------------------------------------------------------

                                                $ 113,339,553  $  87,206,745
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    CURRENT LIABILITIES

      Accounts payable and
       accrued liabilities                      $   6,493,218  $   7,305,923
      Deferred revenue                             42,120,710     24,013,113
    -------------------------------------------------------------------------

                                                   48,613,928     31,319,036
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY

      Share capital                                69,596,430     68,444,332
      Contributed surplus                             838,006        834,041
      Deficit                                      (5,708,811)   (13,390,664)
    -------------------------------------------------------------------------

                                                   64,725,625     55,887,709
    -------------------------------------------------------------------------

                                                $ 113,339,553  $  87,206,745
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Statements of Cash Flows
    (expressed in Canadian dollars)
    (unaudited)
    -------------------------------------------------------------------------

                          Three months ended           Nine months ended
                      --------------------------- ---------------------------
                      September 30, September 30, September 30, September 30,
                              2009          2008          2009          2008
                      ------------- ------------- ------------- -------------
                      -------------               -------------
    NET (OUTFLOW)
     INFLOW OF CASH
     RELATED TO THE
     FOLLOWING
     ACTIVITIES:

      OPERATING
        Net earnings  $  1,650,809  $    483,409  $  8,679,052  $  1,060,555
        Items not
         affecting
         cash
          Bad debt
           expense               -             -       223,838        67,466
          Stock-based
           compensation    100,598        72,050       271,086       168,818
          Foreign
           exchange loss
           (gain) on
           cash held in
           foreign
           currency      1,541,372      (311,360)    3,192,622      (322,264)
          Future income
           tax (recovery)
           expense        (143,000)       80,000      (313,000)       80,000
          Amortization of
           capital assets  419,057       385,226     1,012,178       997,811
    -------------------------------------------------------------------------

                         3,568,836       709,325    13,065,776     2,052,386

        Changes in
         non-cash
         operating
         working
         capital items   2,833,209    (1,654,967)    2,802,205    (1,905,827)
    -------------------------------------------------------------------------

                         6,402,045      (945,642)   15,867,981       146,559
    -------------------------------------------------------------------------

      INVESTING
        Repayment of
         note receivable         -             -             -    10,000,000
        Purchase of
         short-term
         investments   (18,166,784)            -   (18,166,784)            -
        Purchases of
         capital assets   (474,191)      (90,516)   (1,433,330)     (995,842)
    -------------------------------------------------------------------------

                       (18,640,975)      (90,516)  (19,600,114)    9,004,158
    -------------------------------------------------------------------------

      FINANCING
        Proceeds from
         issuance of
         common shares     204,124       363,179     2,374,927       932,534
        Repurchase of
         shares under
         normal course
         issuer bid       (698,807)            -    (2,487,149)            -
        Share issuance
         costs                   -             -             -       (66,558)
    -------------------------------------------------------------------------

                          (494,683)      363,179      (112,222)      865,976
    -------------------------------------------------------------------------

    Foreign exchange
     (loss) gain on
     cash held in
     foreign currency   (1,541,372)      311,360    (3,192,622)      322,264
    -------------------------------------------------------------------------

    NET CASH (OUTFLOW)
     INFLOW            (14,274,985)     (361,619)   (7,036,977)   10,338,957

    CASH AND CASH
     EQUIVALENTS,
     BEGINNING
     OF PERIOD          57,601,779    39,271,815    50,363,771    28,571,239
    -------------------------------------------------------------------------

    CASH AND CASH
     EQUIVALENTS,
     END OF PERIOD    $ 43,326,794  $ 38,910,196  $ 43,326,794  $ 38,910,196
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary
     information:

      Cash on hand and
       bank balances  $ 12,514,071  $ 11,485,740  $ 12,514,071  $ 11,485,740
      Cash equivalents  30,812,723    27,424,456    30,812,723    27,424,456
    -------------------------------------------------------------------------

      Total cash
       and cash
       equivalents    $ 43,326,794  $ 38,910,196  $ 43,326,794  $ 38,910,196
    --------------------------------------------- ---------------------------
    --------------------------------------------- ---------------------------

      Interest
       received       $     74,095  $    275,595  $    469,596  $    987,097



    BRIDGEWATER SYSTEMS CORPORATION
    Consolidated Statements of Shareholders' Equity
    (expressed in Canadian dollars)
    (unaudited)
    -------------------------------------------------------------------------

                                          Common Shares         Contributed
                                       Number        Amount       Surplus
                                       ------        ------       -------

    -------------------------------------------------------------------------

    Three months ended
     September 30, 2009
    -------------------

    Balance at June 30, 2009          24,361,445  $ 69,732,077  $    762,411
    -------------------------------------------------------------------------

    Stock-based compensation                   -             -       100,598
    Repurchase of shares under
     normal course issuer bid           (128,345)     (364,774)
    Exercise of stock options             96,895       229,127       (25,003)
    Net earnings                               -             -             -
    -------------------------------------------------------------------------

    Balance at September 30, 2009     24,329,995  $ 69,596,430  $    838,006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Nine months ended
     September 30, 2009
    -------------------

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

    Stock-based compensation                   -             -       271,086
    Repurchase of shares under
     normal course issuer bid           (528,485)   (1,489,950)            -
    Exercise of stock options          1,888,779     2,642,048      (267,121)
    Net earnings                               -             -             -
    -------------------------------------------------------------------------

    Balance at September 30, 2009     24,329,995  $ 69,596,430  $    838,006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------

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

    -----------------------------------------------------------

    Three months ended
     September 30, 2009
    -------------------

    Balance at June 30, 2009        $ (7,025,587) $ 63,468,901
    -----------------------------------------------------------

    Stock-based compensation                   -       100,598
    Repurchase of shares under
     normal course issuer bid           (334,033)     (698,807)
    Exercise of stock options                  -       204,124
    Net earnings                       1,650,809     1,650,809
    -----------------------------------------------------------

    Balance at September 30, 2009   $ (5,708,811) $ 64,725,625
    -----------------------------------------------------------
    -----------------------------------------------------------

    Nine months ended
     September 30, 2009
    -------------------

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

    Stock-based compensation                   -       271,086
    Repurchase of shares under
     normal course issuer bid           (997,199)   (2,487,149)
    Exercise of stock options                  -     2,374,927
    Net earnings                       8,679,052     8,679,052
    -----------------------------------------------------------

    Balance at September 30, 2009   $ (5,708,811) $ 64,725,625
    -----------------------------------------------------------
    -----------------------------------------------------------
    

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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