Spectrum Signal Processing Inc.
TSX : SSY
NASDAQ : SSPI

Spectrum Signal Processing Inc.

July 14, 2005 07:00 ET

Spectrum Signal Processing Reports Preliminary Second Quarter 2005 Results

BURNABY, BRITISH COLUMBIA--(CCNMatthews - July 14, 2005) - Spectrum Signal Processing Inc. (TSX:SSY)(NASDAQ:SSPI) today announced its preliminary second quarter results. This release is made to provide full disclosure to the market concurrent with the Company's announcement of the introduction of a wideband modem upgrade for the US Navy's AN/USC-61(C) Digital Modular Radio (DMR) with General Dynamics C4 Systems.

Revenues for the company's second quarter of 2005 are expected to be $3.3 million to $3.5 million. Wireless product and service revenues are expected to be $3.1 million to $3.3 million and packet-voice product and service revenues are expected to be $0.2 million to $0.3 million. The company's gross profit is expected to be between $2.0 million and $2.1 million representing a gross margin of approximately 59% - 61% of revenues. Operating expenses are expected to be in the $2.4 million to $2.6 million range. The company expects a net loss of between $0.3 million and $0.6 million, or $0.02 to $0.03 per share.

Spectrum anticipates its cash position, net of bank indebtedness, at June 30, 2005 to be approximately $3.4 million, compared to $3.9 million at March 31, 2005.

Spectrum anticipated a substantial decline in packet-voice revenues in 2005 following its decision in early 2004 to cease all new investment in its packet-voice product line. Second quarter and first half of 2005 packet-voice revenues have declined approximately $1.0 million and $2.1 million relative to the same periods in 2004. Conversely, the company's core wireless product and service revenues have increased over $1.0 million relative to the first half of 2004.

As Spectrum continues to focus its product portfolio and sales activities on wireless C4ISR programs, its operations are becoming increasingly linked with U.S. government procurement cycles. As such, the company sees stronger initial design-in and revenue opportunities in the second half of 2005.

Spectrum will report its second quarter 2005 financial and operating results on July 27, 2005. The company will provide additional information, including a more detailed quarterly review during its regularly scheduled conference call on that date, the details of which will be announced shortly.

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 program risk and cost parameters. Spectrum Signal Processing (USA) Inc., based in Columbia, MD, 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.

FORWARD-LOOKING SAFE HARBOUR STATEMENT

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: change in business strategy, liquidity and capital resources, reliance on significant customers, inflation and foreign exchange fluctuations, political, business and economic conditions, growth rates 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 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.

™ flexComm is a trademark of Spectrum Signal Processing Inc.

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