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RCM TECHNOLOGIES, INC. REPORTS 2010 FOURTH QUARTER AND YEAR-END RESULTS

RCM TECHNOLOGIES, INC. REPORTS 2010 FOURTH QUARTER AND YEAR-END RESULTS EXTENDS STOCK REPURCHASE PROGRAM

RCM Technologies, Inc. has announced its financial results for the thirteen and fifty-two week periods ended January 1, 2011.

The Company announced revenues of $36.4 million for the thirteen week period ended January 1, 2011, decreased from $45.1 million for the fourteen week period ended January 2, 2010 (comparable prior year period). The Company had operating income for the thirteen week period ended January 1, 2011 of $2.3 million as compared to $1.2 million for the comparable prior year period. Net income from continuing operations was $1.2 million, or $0.09 per diluted share, for the thirteen week period ended January 1, 2011, as compared to net income from continuing operations of $0.9 million, or $0.07 per diluted share, for the comparable prior year period.

The Company announced a loss from discontinued operations, net of taxes for the thirteen week period ended January 1, 2011 of $0.1 million as compared to a loss of $0.2 million for the comparable prior year period. Net income for the thirteen week period ended January 1, 2011 was $1.1 million, or $0.08 per diluted share, as compared to net income of $0.7 million, or $0.05 per diluted share, for the comparable prior year period.

In September 2010, the Company sold its light industrial and clerical staffing business located in southern California and doing business under the name Intertec. In March 2010, the Company closed its Oracle business unit located in southern California. The closed business unit sold Oracle software applications and provided implementation, hosting and maintenance services for the suite of Oracle and related software applications.

The Company announced revenues of $162.0 million for the fifty-two week period ended January 1, 2011, decreased from $171.7 million for the fifty-three week period ended January 2, 2010 (comparable prior year period). The Company had operating income for the fifty-two week period ended January 1, 2011 of $9.0 million as compared to $2.5 million for the comparable prior year period. Net income from continuing operations was $6.4 million, or $0.49 per diluted share, for the fifty-two week period ended January 1, 2011, as compared to net income from continuing operations of $7.7 million, or $0.60 per diluted share, for the comparable prior year period. The Company experienced a loss from discontinued operations, net of taxes of $0.6 million for the fifty-two week period ended January 1, 2011 as compared to a loss from discontinued operations of $0.8 million for the comparable prior year period. Net income for the fifty-two week period ended January 1, 2011 was $5.8 million, or $0.44 per diluted share, as compared to a net loss of $6.9 million, or $0.54 per diluted share, for the comparable prior year period.

During the fifty-two week period ended January 1, 2011, the Company recognized a tax benefit of approximately $1.6 million due to an anticipated 2010 tax deduction for goodwill and intangible assets associated with the Oracle business unit discussed above. The Company recognized an impairment of the goodwill and intangible assets associated with this subsidiary in its 2008 Consolidated Financial Statements.

During the fifty-three week period ended January 2, 2010, the Company recorded legal settlement proceeds of $9.8 million, or $5.8 million net of income tax expense. The legal settlement resulted in an increase to earnings per diluted share of $0.45 during that period.

Leon Kopyt, Chairman and CEO of RCM, commented: We are pleased with the respectable levels of improvement in the gross margin expansion of 250 basis points and an operating income increase of 254% in 2010 over 2009. Nonetheless, the lack of revenue growth in 2010 was disappointing and remains our principle focus for 2011. Weve instituted a number of corrective measures designed to improve the sales productivity and sales structure, which we expect to have a positive impact on this years sales performance. We believe that our overall services portfolio is consistent with the market demand and technology changes and reflects our continuing effort of driving diversification and transformation.

The Company also announced that its Board of Directors has approved the continuation of its existing program to repurchase outstanding shares of the Companys common stock. Under the extended program, the Company is authorized to purchase up to $6.6 million of common stock from time to time over the next 24 months, depending on market conditions, share price and other factors. The repurchases may be made on the open market, in block trades or otherwise, and the program may be suspended or discontinued at any time. The program will be funded using the Companys working capital. As of January 1, 2011, the Company had cash, cash equivalents and marketable securities of approximately $24.7 million and no debt. As of February 22, 2011 the Company had approximately 13.0 million shares of common stock outstanding.

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