FMI: Spectrum Signal Processing Inc. Q3 Results; 38 Design-Ins by End of Q3 Exceeds Company's Annual Goal - Company Financial Information

EDGE, On & About AT&T, Nov 2, 1998

Spectrum Signal (All numbers are in US dollars) Spectrum Signal Processing Inc. (NASDAQ NMS:SSPIF/TSE:SSY), the industry leader in high-performance Digital Signal Processing (DSP) systems, Monday reported revenue for the nine months ended September 30, 1998 of $US 19,497,000 compared to $US 18,304,000 for the corresponding period in 1997, an increase of 7 percent.

Net loss for the nine months ended September 30th before a one-time charge in connection with the write-off of in-process R&D costs related to the acquisition in the first quarter of Alex Computer Systems, amounted to $(301,000) or ($0.03) per share, versus net earnings of $1,157,000 or $0.13 per share for the comparable period in 1997. Revenue for the three months ended September 30, 1998 totaled $7,077,000 compared to $7,584,000 for the same period a year ago. Net earnings for the three months ended September 30, 1998 were $11,000 or $0.00 per share, versus $387,000 or $0.04 per share for the comparable period in 1997. Gross profit and gross margin continue to show improvements. For the nine months ended September 30, 1998 gross profit increased 9 percent over the comparable period in 1997. Gross margin for the nine months ended September 30, 1998 grew to 57 percent up slightly from the same period last year. Revenue from Spectrum's new products based on Texas Instruments' (NYSE: TXN) recently released TMS320C6x chip has already surpassed the Company's expectations for the first three quarters, but was offset by a greater than expected reduction in revenue from products based on older DSP technology. The decrease in revenue from older products, coupled with customers buying more conservatively in response to economic instability, contributed to a slow down in revenue growth for the quarter. Alex Computer Systems, acquired earlier this year, continues to be a success with very strong year over year revenue growth, and significant orders for their products expected in the fourth quarter. Design-in momentum continued throughout the third quarter with 13 new design-ins, bringing the total to 38 and surpassing the Company's 1998 goal of 30. "Revenue and earnings did not meet our expectations in the third quarter. In response, management is taking measures to reduce costs and increase our sales effectiveness. The continued momentum in design-in activity, and the strength of our 'C6x and Alex related products has expanded Spectrum's customer base and we have more customers than ever before designing applications around our technology. In the short term our goal is consistent quarter to quarter profitability, winning business in key markets around the world, and solidifying our leadership position in DSP Systems by continuing to be first to market with quality, leading edge technology supported by unsurpassed customer service," said Barry Jinks, President and CEO. Spectrum Signal Processing is the leading worldwide supplier of DSP system solutions. The company offers DSP software, off-the-shelf hardware, custom ASIC design and complete custom systems. Customers such as Nortel, Boeing, Hewlett Packard, Siemens Medical Systems, Northrop Grumman, NEC, Daewoo Telecom, the US Department of Defense and Lockheed Martin benefit from Spectrum's innovative, programmable DSP products, by gaining competitive advantages such as faster time to market and low-cost feature set upgradeability. Spectrum Signal Processing is publicly traded on NASDAQ NMS under the symbol SSPIF and on the TSE under the symbol SSY. The company is ISO9001 quality certified, can be found on the web at http://www.spectrumsignal.com, and is located in Burnaby, B.C., Canada. ph (604) 421-5422; fax (604) 421-1764. The financial results for the period ending September 30, 1998 follow:

Spectrum Signal Processing Inc.
Consolidated Statements of Operations
(Expressed in thousands of United States dollars,
except per share amounts)
Three months ended      Nine months ended
9/30/98    9/30/97     9/30/98     9/30/97
Sales            $  7,077   $  7,584   $  19,497   $  18,304
Earnings (loss)
from operations     (133)       889      (6,826)      1,770
Earnings (loss) before income
taxes and discontinued
operations         (179)       887      (6,929)      1,781
Earnings (loss) from continuing
operations            11        550      (6,000)        285
Earnings (loss) from discontinued
operations           ---       (163)        ---        (500)
Net earnings (loss)    11        387      (6,000)        285
Earnings (loss) per share
from continuing operations
Basic               $0.00      $0.06      ($0.61)      $0.09
Diluted             $0.00      $0.06      ($0.61)      $0.08
Earnings (loss) per share
from discontinued operations
Basic               $0.00      $0.02       $0.00       $0.06
Diluted             $0.00      $0.02       $0.00       $0.05
Earnings (loss) per share
Basic               $0.00      $0.04      ($0.61)      $0.03
Diluted             $0.00      $0.04      ($0.61)      $0.03
Net earnings (loss) before
acquired in-process
R&D charge           11        387        (301)      1,157
Earnings (loss) per share before
acquired in-process R&D charge
Basic               $0.00      $0.04      ($0.03)      $0.13
Diluted             $0.00      $0.04      ($0.03)      $0.12
Weighted average shares
outstanding (000's)
Basic              10,028      9,243       9,801       9,229
Diluted            10,245      9,616       9,801       9,580