Spectrum Signal Processing Reports First Quarter 2005 Results.BURNABY, British Columbia “Burnaby” redirects here. For persons sharing this surname, see Burnaby (surname). Burnaby, British Columbia, Canada, is the city immediately east of Vancouver. -- Spectrum Signal Processing See DSP. Inc. (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :SSY SSY Simpson Spence Young (Hong Kong shipbrokers) SSY Siddha Samadhi Yoga SSY Scottish Socialist Youth )(NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :SSPI SSPI Security Support Provider Interface (Microsoft) SSPI Society of Satellite Professionals International SSPI Steady-State Plasma Insulin SSPI Security Service Provider Interface (Microsoft) ) today announced its financial results for its first quarter ended March 31, 2005. Spectrum reports all results in US dollars and in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . Key first quarter financial metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. include: - Revenue of $4.1 million; - Gross profit of $2.6 million, or 63% of revenue; - Net operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. of $2.9 million; - Net loss of $352,000, or $0.02 per share; and - A cash balance of $3.9 million at March 31, 2005. "We have witnessed a significant change in our revenue composition over the past year," stated Pascal Spothelfer, Spectrum's President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "As anticipated, our packet-voice revenues have gradually declined while our wireless revenues have increased with the introduction of new products and services. Our wireless revenues increased by approximately $900,000 over our first quarter of 2004 and this quarter represented over 90% of our total revenues." "We also made strong strategic progress in our first quarter with the introduction of two application specific integrated development platforms," Mr. Spothelfer added. "The first addresses electronic intelligence applications and the second targets satellite communications applications. Moreover, we continued our design-in progress with the announcement of three new design-ins, including one for our recently announced SDR-3000 MRDP; a rapid prototyping Building a part one layer at a time using a method of additive fabrication such as 3D printing. Such parts are used for concept modeling to determine if the product design meets the customer's expectations. and development platform targeting military communications Military communications, or Signals, is a field of military activities, tactics and equipment dealing with communications. First of all, military communications are battlefield (combat) communications, including intercommunication with a higher command or country's developers." FINANCIAL RESULTS Revenues for the first quarter of 2005 were $4.1 million, a decrease of 11% compared to revenues of $4.6 million for the fourth quarter of 2004 and a decrease of 5% compared to revenues of $4.3 million for the first quarter of 2004. Wireless revenues were $3.7 million for the first quarter of 2005, compared to wireless revenues of $4.2 million for the fourth quarter of 2004 and $2.8 million for the first quarter of 2004. Packet-voice revenues were $389,000 in the first quarter of 2005, down marginally from $416,000 in the fourth quarter of 2004. Packet-voice revenues were $1.5 million in the first quarter of 2004. The Company's continued decline in packet-voice revenues is attributable to a decision by the company in January 2004 to cease all new development in its packet-voice product line. This decision was made in light of significant critical component supply risk and general market uncertainty pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to its packet-voice products. The Company expects its packet-voice product and service revenues to continue to decline over the course of 2005. The company's gross margin for the first quarter of 2005 was $2.6 million, or 63% of revenue, compared $2.8 million, or 61% of revenue, for the fourth quarter of 2004 and $2.5 million, or 58% of revenue, for the first quarter of 2004. Operating expenses for the first quarter of 2005 were $2.9 million, compared to $2.5 million for the fourth quarter of 2004 and $4.8 million for the first quarter of 2004. Operating expenses increased quarter-over-quarter due to a $192,000 non-recurring distributor sales commission, a sales-related severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when charge, the hiring of open US-based sales and engineering positions and foreign exchange impacts in the quarter. The first quarter sales-related severance charge is the result of a decision to move Spectrum's North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. sales leadership function from Canada to the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Operating expenses for the first quarter of 2005 also included a $248,000 expense offset recorded pursuant to the company's funding agreement Funding Agreement Illiquid insurance contracts that provide guaranteed principal repayment and interest payments for a predetermined period of time. Notes: Funding agreements are marketed to mutual fund companies and municipal reinvestments. with Technologies Partnerships Canada ("TPC (Transaction Processing Performance Council, San Francisco, CA, www.tpc.org) An organization devoted to benchmarking transaction processing systems. In order to derive the number of transactions that can be processed in a given time frame, TPC benchmarks measure the total performance of "). Operating expenses for the first quarter of 2004 included restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $2.3 million, a restructuring-related capital asset write-down charge of $270,000 and a $640,000 expense offset recorded pursuant to the company's research and development funding agreement with TPC. Spectrum recorded a net loss of $352,000 for the first quarter of 2005, or $0.02 per share, compared to net earnings of $294,000, or $0.02 per share, for the fourth quarter of 2004 and a loss of $2.3 million, or $0.16 per share, for the first quarter of 2004. Spectrum's cash position, net of bank indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , at March 31, 2005 stood at $3.9 million, compared to $3.3 million at December 31, 2004. OPERATIONAL HIGHLIGHTS During the first quarter of 2005, Spectrum announced: - A design-in with an unnamed US defense contractor Noun 1. defense contractor - a contractor concerned with the development and manufacture of systems of defense armed forces, armed services, military, military machine, war machine - the military forces of a nation; "their military is the largest in the region"; including an initial sale of two SDR-3000 MRDP platforms. The order is the first design-in for Spectrum's flexComm(TM) SDR-3000 MRDP, a rapid-prototyping development platform designed for military communications applications. The customer will use the SDR-3000 MRDP platforms to conduct communications software (communications, software) communications software - Application programs, operating system components, and probably firmware, forming part of a communication system. These different software components might be classified according to the functions within the Open Systems testing related to the Software Communications Architecture The Software Communications Architecture (SCA) is an open architecture framework that tells designers how elements of hardware and software are to operate in harmony within a software defined radio. SCA is a key element in the U.S. military's Joint Tactical Radio System (JTRS). (SCA (Single Connector Attachment) An 80-pin plug and socket used to connect peripherals. With a SCSI drive, it rolls three cables (power, data channel and ID configuration) into one connector for fast installation and removal. ); - A design-in with an unnamed international government defense agency which will use Spectrum's flexComm HCDR-1002 platform for the development of a wideband communications intelligence Noun 1. communications intelligence - technical and intelligence information derived from foreign communications by other than the intended recipients COMINT application; - The availability of the flexComm SDR-2000 SRDP SRDP Scottish Rural Development Plan SRDP Standard Reference Data Program SRDP Short Run Digital Printing SRDP State Registered Domestic Partners (California) SRDP Sind Rural Development Project (Pakistan) , a satellite communications (SATCOM (SATellite COMmunication) Refers to the field of communications via satellite. ) rapid-prototyping and development platform. This fully integrated "IF to Ethernet" commercial off-the-shelf software commercial off-the-shelf software - commercial software defined radio platform is designed for the rapid development and deployment of satellite ground stations supporting bi-directional communications with multiple remote terminals; - The availability of the flexComm SDR-2000 ERDP ERDP The England Rural Development Programme ERDP Engineering Rotational Development Program (Caterpillar) ERDP Engine Room Distribution Panel (maritime electrical systems) , an electronic intelligence (ELINT Noun 1. ELINT - intelligence derived from electromagnetic radiations from foreign sources (other than radioactive sources) electronics intelligence ) rapid-prototyping and development platform. This fully integrated, commercial-off-the-shelf software defined radio A wireless terminal (phone, PDA, etc.) that is reconfigurable via software. It enables wireless devices to be easily updated to new or later versions of the air interface and allows multiple interfaces to be supported. platform is designed to promote the rapid development and deployment of intelligence systems targeting the intercept intercept in mathematical terms the points at which a curve cuts the two axes of a graph. and processing of RADAR signals; and - A design-in with a leading European defense contractor for the development of a compact electronic warfare Noun 1. electronic warfare - military action involving the use of electromagnetic energy to determine or exploit or reduce or prevent hostile use of the electromagnetic spectrum EW military action, action - a military engagement; "he saw action in Korea" platform. The contractor will use Spectrum's flexComm SDR-3000 software reconfigurable platform to provide advanced signal processing and transceiver (TRANSmitter reCEIVER) An electronic device or circuit that transmits and receives analog or digital signals. It comes in many forms; for example, a transponder on a satellite, a network adapter in the computer or the circuits in a cellphone. functions in its next generation mobile ultrawideband jamming system. CONFERENCE CALL INFORMATION Spectrum will conduct a conference call and live audio webcast on April 26, 2005 at 4:30 pm Eastern / 1:30 pm Pacific time. The call can be accessed via telephone or audio web cast. The conference call dial-in number is 1.800.387.6216. The live audio web cast can be accessed on Spectrum's web site at www.spectrumsignal.com. A conference call replay will be available via telephone from April 26, 2005 to May 17, 2005 and can be accessed by dialing 1.416.695.5800 followed by the access code 3149196#. A conference call replay via audio web cast will be available via Spectrum's web site until May 10, 2005. FORWARD-LOOKING SAFE HARBOUR STATEMENT The statements by Pascal Spothelfer and the above statements contained in this Business Outlook are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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: change in business strategy, liquidity and capital resources, reliance on significant customers, inflation and foreign exchange fluctuations, political, business and economic conditions, growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. of the defense and commercial wireless markets, government budget cycles, changes in customer order patterns, the cost and availability of key components, successful contract negotiations, competitive factors, technology changes, the ability to successfully develop and market new products, the acceptance of new products, pricing pressures, and the ability to grow new defense and commercial wireless business. Readers are referred to Spectrum's assumptions and other risk factors set out in the most current Annual Report filed on Form 20-F with the Securities and Exchange Commission and with the British Columbia Securities Commission The British Columbia Securities Commission (BCSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of British Columbia. External links
ABOUT SPECTRUM SIGNAL PROCESSING INC. Spectrum Signal Processing Inc. (TSX:SSY)(NASDAQ:SSPI) is a leading supplier of software defined platforms for defense electronics applications. Spectrum's products and services are optimized for military communications, signals intelligence, surveillance, electronic warfare and satellite communications applications. Spectrum's integrated, application-ready products provide its customers with compelling time-to-market and performance advantages while mitigating mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. program risk and cost parameters. Spectrum Signal Processing (USA) Inc., based in Columbia, Maryland Columbia is a census-designated place and planned community in Howard County, Maryland, United States. It is a suburb of Baltimore, and, to a lesser degree, Washington, DC. It began with the idea that a city could enhance its residents' quality of life. , provides application engineering services and modified commercial-off-the-shelf platforms to the US Government, its allies and its prime contractors. More information on Spectrum and its flexComm product line is available at www.spectrumsignal.com. (TM)flexComm is a trademark of Spectrum Signal Processing Inc.
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 conformity with accounting principles generally
accepted in the United States of America
Three months ended March 31,
2004 2005
--------------------------------------------------------------------
(Unaudited) (Unaudited)
Sales $ 4,280 $ 4,100
Cost of sales 1,803 1,535
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2,477 2,565
Expenses
Administrative 1,098 986
Sales and marketing 679 1,036
Research and development 308 722
Amortization 132 163
Write-down of capital assets 270 -
Restructuring charges 2,329 22
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4,816 2,929
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Loss from operations (2,339) (364)
Other
Interest expense 9 -
Other income - (12)
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9 (12)
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Net loss (2,348) (352)
Deficit, beginning of period (19,953) (21,545)
--------------------------------------------------------------------
Deficit, end of period $ (22,301) $ (21,897)
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Loss per share
Basic $ (0.16) $ (0.02)
Diluted $ (0.16) $ (0.02)
Weighted average shares
Basic 14,946,203 18,728,721
Diluted 14,946,203 18,728,721
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Spectrum Signal Processing Inc.
Consolidated Balance Sheets
(Expressed in thousands of United States dollars,
except numbers of shares)
Prepared in conformity with accounting principles generally
accepted in the United States of America
December 31, March 31,
ASSETS 2004 2005
--------------------------------------------------------------------
(Unaudited)
Current assets
Cash and cash equivalents $ 3,326 $ 3,948
Restricted cash 73 -
Trade receivables, net of allowance
for doubtful accounts of
$386 (2004 - $403) 3,736 3,412
Receivable from Technology
Partnerships Canada 257 247
Inventories 1,784 1,466
Prepaid expenses 157 128
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9,333 9,201
Capital assets 1,370 1,374
Other assets 274 265
--------------------------------------------------------------------
$ 10,977 $ 10,840
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LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------------
Current liabilities
Accounts payable $ 1,770 $ 1,678
Accrued liabilities and other
current liabilities 1,814 1,377
Deferred revenue 216 450
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3,800 3,505
Long-term obligations 905 884
Stockholders' equity
Share capital
Authorized: 50,000,000 common shares,
no par value
Issued and outstanding: 18,805,849
(2004 - 18,369,644) 28,857 29,391
Additional paid-in capital 667 667
Warrants 114 111
Deficit (21,545) (21,897)
Accumulated other comprehensive income
Cumulative translation adjustments (1,821) (1,821)
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6,272 6,451
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$ 10,977 $ 10,840
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Spectrum Signal Processing Inc.
Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
Prepared in conformity with accounting principles generally
accepted in the United States of America
Three months ended March 31,
2004 2005
--------------------------------------------------------------------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net loss $ (2,348) $ (352)
Adjustments to reconcile net loss
to net cash provided by (used for)
operating activities
Amortization 133 172
Write-down of capital assets 270 -
Non-cash portion of restructuring
charges 1,326 22
Changes in operating assets and
liabilities
Restricted cash (99) 73
Accounts receivable (642) 334
Inventories 115 318
Prepaid expenses (32) 29
Accounts payable 497 (92)
Accrued liabilities and other
current liabilities (236) (480)
Deferred revenue - 234
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Net cash provided by (used for)
operating activities (1,016) 258
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Cash flows from investing activities
Purchase of capital assets (104) (167)
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Net cash used for investing activities (104) (167)
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Cash flows from financing activities
Issue of shares from share purchase
warrants, net of issue costs - 531
Issue of shares for cash, net
of issue costs 1,978 -
--------------------------------------------------------------------
Net cash provided by financing
activities 1,978 531
--------------------------------------------------------------------
Net increase in cash and cash
equivalents during the period 858 622
Cash and cash equivalents,
beginning of period 458 3,326
--------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 1,316 $ 3,948
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Certain comparative figures have been reclassified to conform to the
presentation adopted in the current year.
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