Spectrum News
NEWS RELEASE TRANSMITTED BY CCNMatthews FOR: SPECTRUM SIGNAL PROCESSING INC. TSX SYMBOL: SSY NASDAQ SYMBOL: SSPI JULY 21, 2003 - 16:00 ET Spectrum Signal Processing Announces Second Quarter Results BURNABY, BRITISH COLUMBIA--Spectrum Signal Processing Inc. (NASDAQ: SSPI / TSX: SSY) a leading provider of high performance wireless signal processing and packet-voice solutions, today announced its financial results for the second quarter ended June 30, 2003. Spectrum reports all results in U.S. dollars and in accordance with U.S. GAAP. For the quarter ended June 30, 2003, Spectrum recorded sales of $4.1 million, down 28% from the prior quarter and down 35% from sales of $6.3 million in the second quarter of 2002. Wireless Systems sales were $2.2 million for the second quarter of 2003. Wireless Systems sales reflect a $1.9 million decline in legacy product sales from the first quarter. Network Solutions sales were $1.9 million for the second quarter of 2003, an increase of $1.5 million over the first quarter as a result of production volume shipments to UTStarcom. Spectrum recorded a loss of $2.5 million, or a loss of $0.17 per share, for the quarter ended June 30, 2003, compared to breakeven earnings in the prior quarter, and net earnings of $81,000 or $0.1 per share for the second quarter of 2002. Spectrum's gross margin was 42% in the second quarter of 2003, compared to 62% in the prior quarter and 58% in the second quarter of 2002. The decline in gross margin was the result of product mix, and a high proportion of development system sales to new customers involving the resale of lower margin third party products. Gross margins for both Wireless Systems and Network Solutions were 42% in the second quarter of 2003. The margins for Spectrum's internally developed products remained consistent with those realized in the first quarter. Spectrum's cash position at June 30, 2003 stood at $2.6 million, down from $2.8 million in the previous quarter. Given weak second quarter sales and based on internal forecasts, Spectrum expects its cash position to decline over the third quarter, but expects a positive cash balance at the end of the quarter. "We are looking forward to improving results in the third quarter as we expect revenues in the second half of the year to strengthen. As reflected in our guidance issued July 14, 2003, annual revenues are expected to range from $23 million to $27 million," stated Pascal Spothelfer, Spectrum's President and CEO. "Notwithstanding our initiative to pursue strategic alternatives, we are driving our business forward and are experiencing full support from our customers, suppliers, and partners." Spectrum will conduct a conference call and live audio web cast on July 21, 2003 at 4:30 pm Eastern / 1:30 pm Pacific time. The call can be accessed by dialing 1.800.273.9672, or by accessing the audio web cast from Spectrum's web site at www.spectrumsignal.com. A replay of the call will be available from July 21, 2003 to July 28, 2003 and can be accessed by dialing 1.416.695.5800 followed by the access code 1443417, or by visiting www.spectrumsignal.com. Forward-Looking Safe Harbor Statement The statements by Pascal Spothelfer, and the above statements contained in this Business Outlook, are forward-looking statements that involve a number of risks and uncertainties. In addition to factors discussed above, among other factors that could cause actual results to differ materially are the following: business and economic conditions, growth rates of the packet-voice or commercial wireless markets, government spending, changes in customer order patterns, supplier costs, successful contract negotiations, competitive factors, such as rival system-level architectures, developments in processor technology, the acceptance of new products in specific markets, pricing pressures, development and timing of introduction of new products, continued success in technological advances, and the ability to grow new packet-voice and defense and commercial wireless business. Readers are referred to Spectrum's assumptions and other risk factors set out in the most current Form 20-F filed with the Securities and Exchange Commission and with the British Columbia Securities Commission. The company wishes to caution readers not to place undue reliance upon any such forward-looking statements, which reflect management's best effort to provide guidance based on all known conditions on the date the statements are made. The company may or may not update these forward-looking statements in the future. About Spectrum Signal Processing Inc. Spectrum Signal Processing designs, develops and markets high performance wireless signal processing and packet-voice processing subsystems for use in communications infrastructure equipment. Spectrum's optimized hardware, software and chip technology work together to collect, compress and convert voice and data signals. Leveraging its 16 years of design expertise, Spectrum provides its customers with faster time to market and lower costs by delivering highly flexible, reliable and high-density solutions. Spectrum subsystems are targeted for use in defense communications systems, satellite hubs, cellular base stations, media gateways and next-generation voice and data switches. More information on Spectrum and its aXs and flexComm product lines is available at www.spectrumsignal.com. /T/ Spectrum Signal Processing, Inc. Consolidated Statements of Operations and Deficit (Expressed in thousands of United States dollars, except per share amounts and numbers of shares) Prepared in accordance with United States generally accepted accounting principles Three months ended Six months ended June 30, June 30, 2002 2003 2002 2003 ------------------------------------------------------------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Sales $ 6,251 $ 4,093 $ 12,342 $ 9,795 Cost of sales 2,597 2,372 5,055 4,523 ------------------------------------------------------------------- 3,654 1,721 7,287 5,272 Expenses Administrative 1,387 1,223 2,451 2,484 Sales and marketing 995 1,317 2,050 2,569 Research and development 998 1,418 2,125 2,278 Amortization 176 226 343 419 Restructuring and other charges - 1 - (51) ------------------------------------------------------------------- 3,556 4,185 6,969 7,699 ------------------------------------------------------------------- Earnings (loss) from operations 98 (2,464) 318 (2,427) Other Interest expense 4 9 7 15 Other expense (income) 3 - 2 (2) ------------------------------------------------------------------- 7 9 9 13 Earnings (loss) before income taxes 91 (2,473) 309 (2,440) Income tax expense Current 10 - 10 - ------------------------------------------------------------------- - 10 10 - ------------------------------------------------------------------- Net earnings (loss) 81 (2,473) 299 (2,440) Deficit, beginning of period (11,236) (15,128) (11,454) (15,161) Cancellation of treasury shares (743) - (743) - ------------------------------------------------------------------- Deficit, end of period $ (11,898) $ (17,601) $ (11,898) $ (17,601) ------------------------------------------------------------------- ------------------------------------------------------------------- Earnings (loss) per share Basic $ 0.01 $ (0.17) $ 0.02 $ (0.17) Diluted $ 0.01 $ (0.17) $ 0.02 $ (0.17) Weighted average shares Basic 12,702,680 14,732,391 12,534,568 14,732,391 Diluted 12,985,650 14,732,391 12,716,352 14,732,391 ------------------------------------------------------------------- ------------------------------------------------------------------- Spectrum Signal Processing, Inc. Consolidated Balance Sheets (Expressed in thousands of United States dollars, except numbers of shares) Prepared in accordance with United States generally accepted accounting principles December 31, June 30, ASSETS 2002 2003 ------------------------------------------------------------------ (Unaudited) Current assets Cash and cash equivalents $ 3,480 $ 2,624 Trade receivables net of allowance for doubtful accounts of $281 (2002-$221) 4,887 3,540 Receivable from Technology Partnerships Canada 496 286 Inventories 2,414 2,891 Prepaid expenses 132 262 ------------------------------------------------------------------ 11,409 9,603 Capital assets 2,666 3,124 ------------------------------------------------------------------ $ 14,075 $ 12,727 ------------------------------------------------------------------ ------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------------------------------------ Current liabilities Accounts payable $ 2,346 $ 3,229 Accrued liabilities 2,213 2,075 ------------------------------------------------------------------ 4,559 5,304 Long-term obligations 857 791 Stockholders' equity Share capital Authorized: 50,000,000 common shares, no par value Issued and outstanding: 14,732,391 (2002 - 14,732,391) 24,974 24,974 Additional paid-in capital 554 554 Warrants 113 113 Deficit (15,161) (17,601) Accumulated other comprehensive income Cumulative translation adjustments (1,821) (1,408) ------------------------------------------------------------------ 8,659 6,632 ------------------------------------------------------------------ $ 14,075 $ 12,727 ------------------------------------------------------------------ ------------------------------------------------------------------ Spectrum Signal Processing, Inc. Consolidated Statements of Cash Flows (Expressed in thousands of United States dollars) Prepared in accordance with United States generally accepted accounting principles Three months ended Six months ended June 30, June 30, 2002 2003 2002 2003 -------------------------------------------------------------------- (Unaudited) (Unaudited) (Unaudited) (Unaudited) Cash flows from operating activities Net earnings (loss) $ 81 $ (2,473) $ 299 $(2,440) Adjustments to reconcile net earnings (loss) to net cash provided by (used for) operating activities Amortization 176 226 343 419 Changes in operating assets and liabilities Accounts receivable 853 2,297 751 2,283 Inventories 234 (94) 50 (73) Prepaid expenses (144) (51) (142) (101) Accounts payable 38 251 (360) 462 Accrued liabilities (116) (29) 196 (471) Long-term obligations - (52) - (194) -------------------------------------------------------------------- Net cash provided by (used for) operating activities 1,122 75 1,137 (115) -------------------------------------------------------------------- Cash flows from investing activities Purchase of capital assets (117) (165) (218) (411) -------------------------------------------------------------------- Net cash used for investing activities (117) (165) (218) (411) -------------------------------------------------------------------- Cash flows from financing activities Issue of shares from share options 10 - 11 - Issue of shares from Employee Share Purchase Plan 40 - 40 - Issue of shares for cash 4,107 - 4,107 - -------------------------------------------------------------------- Net cash provided by financing activities 4,157 - 4,158 - -------------------------------------------------------------------- Effect of foreign currency exchange rates on cash and cash equivalents (94) (102) (96) (330) -------------------------------------------------------------------- Net increase (decrease) in cash and cash equivalents during the period 5,068 (192) 4,981 (856) Cash and cash equivalents, beginning of period 1,257 2,816 1,344 3,480 -------------------------------------------------------------------- Cash and cash equivalents, end of period $ 6,325 $ 2,624 $ 6,325 $ 2,624 -------------------------------------------------------------------- /T/ -30-FOR FURTHER INFORMATION PLEASE CONTACT:
Spectrum Signal Processing Inc.
Liza Aboud
(604) 421-5422 ext.152
Email: liza_aboud@spectrumsignal.com
or
Spectrum Signal Processing Inc.
Brent Flichel
(604) 421-5422 ext 247
Email: brent_flichel@spectrumsignal.com
Website: www.spectrumsignal.com
