Spectrum Signal Processing Inc. Third Quarter Results - Company Financial Information

Edge: Work-Group Computing Report, Oct 25, 1999

Spectrum Signal(NASDAQ:SSPI) (TSE:SSY.) Spectrum Signal Processing Inc. (NASDAQ: SSPI / TSE:SSY), a world leader in high performance digital signal processing (DSP) systems, Tuesday announced its financial results for the third quarter of 1999.

Sales for the third quarter ended September 30, 1999 totalled US$ 5,238,000, compared to sales of US$ 7,077,000 for the third quarter of 1998. Sales for the nine months ended September 30, 1999 totalled US$18,677,000 compared to sales of US$19,497,000 for the comparable period in 1998.

Earnings before interest, taxes, depreciation, amortization and one-time charges ("EBITDA" or Cash Earnings), amounted to a loss of US$ (626,000) or US$ (0.06) per share for the third quarter of 1999, compared to a gain of US$ 64,000 or US$ 0.01 per share for the third quarter of 1998. EBITDA for the first nine months of 1999 amounted to US$ 580,000 or US$ 0.06 per share, compared to a loss of US$ (45,000) or US$ 0.00 for the year-earlier period.

Net loss for the third quarter of 1999 totalled US$ (548,000) or US$ (0.05) per share, compared to a restated net loss of US$ (147,000) or US$ (0.01) per share for the same quarter in 1998. Net loss for the first nine months of 1999 totalled US$ (371,000) or US$ (0.04) per share, compared to a restated net loss of US$ (2,789,000) or US$ (0.28) for the year-ago period.

"Despite slower sales during the third quarter, we are confident that we will meet our internal forecasts for fiscal 1999," said Marty McConnell, Acting Chief Operating Officer. "The modest recovery trend that began earlier this year at Spectrum remains intact. Expenses are down, bookings are up, our cash position has dramatically improved and the overall DSP systems market is gradually recovering from a tough 1998."

For the nine months ended September 30, 1999, Spectrum's bookings were up 25% compared to the year-earlier period. Total SG&A expenses, before acquired in-process research and development charges, declined 7% over the same period in 1998. Gross margins were steady at 57%, and for the first time since Spectrum acquired Alex Computer Systems in the first quarter of 1998, the Company has a positive net cash position. Spectrum has recorded a US$ 4,053,000 improvement in its net cash position over the last five quarters.

"Meanwhile, Spectrum's Board of Directors is moving ahead aggressively in its search for a new CEO to take our company to the next level, while we complete the internal strategic review process we began last spring. I am pleased with the progress we are making on both fronts, and I'm confident that the Company will be well positioned for its next phase of growth," Mr. McConnell added.

The restatement to Spectrum's 1998 results arises from guidance provided by the Securities and Exchange Commission related to the valuation of in-process research and development, stemming from Spectrum's acquisition of Alex Computer Systems in 1998. The adjustments do not have any impact on Spectrum's net operating cash flow.

Spectrum Signal Processing is a world leader in DSP system solutions, and offers DSP software, off-the-shelf hardware, custom ASIC design and complete custom systems. The company is ISO9001 quality certified, and can be found on the web at http://www.spectrumsignal.com. Spectrum is located at One Spectrum Court, No. 200 - 2700 Production Way, Burnaby, B.C., Canada. ph (604) 421-5422; fax (604) 421-1764.

Any statements made by the company that are not historical facts are forward-looking statements that are pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, including the timely development and acceptance of new products, the impact of competitive products and pricing, changing market conditions and the other risks detailed in the company's prospectus and from time to time in other filings. Actual results may differ materially from those projected. These forward-looking statements represent the company's judgment as of the date of this release. The company may or may not update these forward-looking statements in the future.

                  SPECTRUM SIGNAL PROCESSING INC.
               Consolidated Statements of Operations
          (Expressed in thousands of United States dollars,
                    except per share amounts)
              (Prepared in accordance with US GAAP)

                               3 months ended        9 months ended
                               September 30,         September 30,
                              1998       1999       1998       1999
                                 (Unaudited)          (Unaudited)
-------------------------------------------------------------------
Sales                      $ 7,077    $ 5,238   $ 19,497   $ 18,677

Earnings (loss)
from operations              (291)      (985)    (3,615)      (594)

Earnings (loss) before
income taxes                 (337)    (1,002)    (3,718)      (623)

Net earnings (loss)          (147)      (548)    (2,789)      (371)

Earnings (loss) per share
      Basic               $ (0.01)   $ (0.05)   $ (0.28)   $ (0.04)
      Diluted             $ (0.01)   $ (0.05)   $ (0.28)   $ (0.04)

EBITDA                          64      (626)       (45)        580

EBITDA per share
      Basic                 $ 0.01   $ (0.06)     $ 0.00     $ 0.06
      Diluted               $ 0.01   $ (0.06)     $ 0.00     $ 0.06

Weighted average shares
outstanding (000's)
      Basic                 10,028     10,077      9,801     10,049
      Diluted               10,245     10,077      9,801     10,049