Press Releases

Unedited news and product information from vendors.

UTStarcom Releases Financial Results for the First Quarter of 2010
May 04, 2010 (04:05 PM EDT)


ALAMEDA, Calif., May 4 /PRNewswire-Asia-FirstCall/ -- UTStarcom, Inc. (Nasdaq: UTSI), today reported financial results for the first quarter of 2010 ended March 31, 2010.

"Revenue results for the first quarter were in line with expectations. We achieved improved bottom line results compared with the same period a year ago due to the significant changes we have made to our cost structure," said Peter Blackmore, UTStarcom's chief executive officer and president. "We will continue to improve our cost structure and build bookings to put UTStarcom on the path to profitability."

First quarter 2010 Financial Results

Net sales for the first quarter 2010 were $81 million as compared to $119 million in the first quarter of 2009. Gross margins for the first quarter 2010 were 34% as compared to 18% in the first quarter of 2009. The operating loss for the first quarter of 2010 and 2009 was $19 million and $59 million, respectively.

The GAAP net loss attributable to UTStarcom for the first quarter of 2010 was $16 million, or a loss of $0.12 per share, as compared to a loss of $67 million, or $0.54 per share in the first quarter of 2009.

The following significant items affected the first quarter 2010 GAAP operating expenses of $46 million:

    -- A $7.5 million restructuring charge primarily related to restructuring
       initiatives announced in June 2009.
    -- A $1.8 million gain related to the sale of a legacy business.

Net cash, cash equivalents and short-term investments as of March 31, 2010 was $235 million compared to $267 million on December 31, 2009.

Non-GAAP Results

To enable a comparison of the financial results for the Company on a year-over-year basis the Company has prepared certain non-GAAP results which present the Company's results as if both the divestiture of PCD and the wind-down of the Company's Korea-based handset operations were completed as of the beginning of the earliest period presented prior to each time-period presented.

The first quarter 2010 non-GAAP revenue was $78 million, the non-GAAP gross margin was 34% and the non-GAAP operating loss was $19 million. This compares to the first quarter 2009 non-GAAP revenue of $80 million, the non-GAAP gross margin of 24% and the non-GAAP operating loss of $59 million.

Conference Call

The Company will host a conference call to discuss the results at 2:00 p.m. (PDT) / 5:00 p.m. (EDT) on May 4, 2010 and 5:00 a.m. China time on May 5, 2010.

The conference call dial-in numbers are as follows: United States 877-405-3429; International 702-928-6906. The conference ID number is 6798-7937.

A replay of the call will be available for 7 days. The conference call replay numbers are as follows: United States -- 800-642-1687; International -- 706-645-9291. The Access Code is 6798-7937.

Investors will also have the opportunity to listen to the conference call and the replay over the Internet through the investor relations section of UTStarcom's Web site at: http://www.utstar.com .

To listen to the live call, please go to the Web site at least 15 minutes early to register, and to download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will also be available on this site.

Discussion of Non-GAAP Financial Measures

On July 1, 2009, the Company divested its Personal Communications Division ("PCD"), which has historically represented a significant portion of the Company's revenues. On December 18, 2009, the Company announced actions to wind down its Korea-based handset manufacturing operations. To enable a comparison of the financial results for the Company on a year-over-year and a quarter-over-quarter basis the Company has prepared certain non-GAAP results which present the Company's results as if both the divestiture of PCD and the wind down of the Company's Korea-based handset operations were completed prior to each time period presented. The reconciliation between GAAP and these non-GAAP financial measures is provided at the end of this press release and on the Company's website.

In addition, these non-GAAP measures are among the information management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with generally accepted accounting principles in the United States.

About UTStarcom, Inc.

UTStarcom is a global leader in IP-based, end-to-end networking solutions and international service and support. The Company sells its solutions to operators in both emerging and established telecommunications markets around the world. UTStarcom enables its customers to rapidly deploy revenue- generating access services using their existing infrastructure, while providing a migration path to cost-efficient, end-to-end IP networks.

Founded in 1991 and headquartered in Alameda, California, the Company has research and development operations in the United States, China, and India. For more information about UTStarcom, visit the Company's Web site at http://www.utstar.com .

Forward-Looking Statements

This release includes forward-looking statements, including statements regarding the Company's strategy to reduce operating expenses, achieve profitability, investment in selective products and certain geographic regions and transition to a new business model. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially. These risks include the ability of the Company to realize anticipated results of operational improvements, increase bookings, successfully transition to a new management team and headquarters location and execute on its business plan as well as risk factors identified in its latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as filed with the Securities and Exchange Commission. The Company is in a period of significant transition and in the conduct of its business is exposed to additional risks as a result. All forward-looking statements included in this release are based upon information available to the Company as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statement.



                                 UTStarcom, Inc.
                      Condensed Consolidated Balance Sheets
                                 (in thousands)
                                   (Unaudited)

                                                  March 31,       December 31,
                                                     2010             2009
                                                 ---------         ---------
                   ASSETS
    Current assets:
      Cash, cash equivalents and short-term
       investments                                $234,720          $266,881
      Accounts and notes receivable, net            45,218            43,773
      Inventories and deferred costs               199,474           202,753
      Prepaids and other current assets             73,945            74,354
                                                 ---------         ---------
        Total current assets                       553,357           587,761
    Long-term assets:
      Property, plant and equipment, net           129,168           130,612
      Long-term deferred costs                     173,673           184,978
      Other long-term assets                        26,791            25,760
                                                 ---------         ---------
        Total assets                              $882,989          $929,111
                                                 =========         =========

           LIABILITIES AND EQUITY
    Current liabilities:
      Accounts payable                             $42,333           $54,115
      Customer advances                            131,734           120,364
      Deferred revenue                             170,487           170,777
      Other current liabilities                    137,763           147,914
                                                 ---------         ---------
        Total current liabilities                  482,317           493,170
    Long-term liabilities:
      Long-term deferred revenue and other
       liabilities                                 159,955           179,790
                                                 ---------         ---------
        Total liabilities                          642,272           672,960

    Total equity                                   240,717           256,151
                                                 ---------         ---------
        Total liabilities and equity              $882,989          $929,111
                                                 =========         =========



                                 UTStarcom, Inc.
                 Condensed Consolidated Statements of Operations
                    (in thousands, except per share amounts)
                                   (Unaudited)

                                                  Three months ended March 31,
                                                     2010              2009
                                                 ---------         ---------
    Net sales                                      $80,847          $119,340
    Cost of net sales                               53,638            97,688
                                                 ---------         ---------
    Gross profit                                    27,209            21,652
                                                 ---------         ---------

    Operating expenses:
      Selling, general and administrative           30,190            54,180
      Research and development                      10,023            21,508
      Restructuring charges                          7,507             4,819
      Net gain on divestiture                       (1,752)               --
                                                 ---------         ---------
    Total operating expenses                        45,968            80,507
                                                 ---------         ---------

    Operating loss                                 (18,759)          (58,855)
                                                 ---------         ---------

    Interest income, net                               278               459
    Other income (expense), net                      4,867            (7,214)
                                                 ---------         ---------
    Loss before income taxes                       (13,614)          (65,610)
    Income taxes expense                            (2,353)           (1,824)
                                                 ---------         ---------
    Net loss                                       (15,967)          (67,434)

    Net loss attributable to
     noncontrolling interest                             4                 1
                                                 ---------         ---------
    Net loss attributable to UTStarcom, Inc.      $(15,963)         $(67,433)
                                                 =========         =========

    Net loss per share attributable to
     UTStarcom, Inc. - Basic and Diluted            $(0.12)           $(0.54)

    Weighted average shares used in per
     share calculation:
    Basic and Diluted                              129,415           125,731
                                                 =========         =========



                                 UTStarcom, Inc.
                  Condensed Consolidated Statements of Cashflows
                                  (in thousands)
                                   (Unaudited)

                                                 Three months ended March 31,
                                                     2010               2009
                                                 ---------          ---------

    Net cash used in operating activities         $(46,711)          $(12,007)
                                                 ---------          ---------

    Cash flows from investing activities:
      Property, plant and equipment, net              (470)            (1,055)
      Deposit received on pending sale of
       building                                      6,583                 --
      Proceeds from divestitures                     1,500                 --
      Proceeds from settlement of an
       investment interest                             422                 --
      Purchase of an investment interest              (563)                --
      Change in restricted cash                      4,995              2,068
      Short-term investments, net                      758              3,286
      Other                                            814                301
                                                 ---------          ---------
    Net cash provided by investing
     activities                                     14,039              4,600
                                                 ---------          ---------
    Cash flows from financing activities:
      Other                                            (25)              (163)
                                                 ---------          ---------
    Net cash used in financing activities              (25)              (163)
    Effect of exchange rate changes on
     cash and cash equivalents                       1,295             (2,463)
                                                 ---------          ---------
    Net decrease in cash and cash
     equivalents                                   (31,402)           (10,033)
    Cash and cash equivalents at
     beginning of period                           265,843            309,603
                                                 ---------          ---------
    Cash and cash equivalents at end of
     period                                       $234,441           $299,570
                                                 =========          =========



                                     UTSTARCOM, INC.
                              May 4, 2010 Conference Call


                  RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE
                                     ($ in millions)
                                       (Unaudited)

    To supplement our condensed consolidated financial statements presented on
    a GAAP basis, UTStarcom uses certain non-GAAP measures which are adjusted
    to present those metrics as if both PCD had been divested and the Korea
    handsets business had been wound down prior to each time period reflected
    below.  We believe this enables year over year comparisons to our recent
    financial results.  These adjustments to our GAAP results are made with
    the intent of providing both management and investors a more complete
    understanding of UTStarcom's underlying results and trends.  In addition,
    these adjusted non-GAAP results are among the information management uses
    as a basis for our planning and forecasting of future periods.  The
    presentation of this additional information is not meant to be considered
    in isolation or as a substitute for results prepared in accordance with
    generally accepted accounting principles in the United States.


                                  Year ended  Qtr ended  Qtr ended  Qtr ended
                                   31-Dec-08  31-Mar-09  30-Jun-09  30-Sep-09
                                  -------------------------------------------
    GAAP Revenue (a)                 $1,641      $119        $80        $71

    Less: PCD Segment Revenue (b)      $880        --         --         --

    Less: Korea Handset Sales to
     PCD (c)                           $127       $39        ($3)        $8
                                  -------------------------------------------
    Non-GAAP Revenue                   $634       $80        $83        $63
                                  ===========================================


                                         Qtr ended Year ended  Qtr ended
                                         31-Dec-09  31-Dec-09  31-Mar-10
                                  -------------------------------------------
    GAAP Revenue (a)                        $116       $386      $80.8

    Less: PCD Segment Revenue (b)             --         --         --

    Less: Korea Handset
     Sales to PCD (c)                        $12        $56       $2.5
                                  -------------------------------------------
    Non-GAAP Revenue                        $104       $330      $78.3
                                  ===========================================


    (a) GAAP Revenue for each period is the consolidated revenue as reported
        on Form 10-Q or Form 10-K, as applicable, for such period, except for
        the consolidated revenue for the quarter ended March 31, 2010, which
        is derived from the unaudited Statements of Operations of the Company

    (b) Effective July 1, 2008 the PCD segment was divested by the Company.

    (c) Prior to the July 1, 2008 divestiture of PCD, Korea handset did not
        record revenue for units shipped to PCD as this activity was an
        intercompany transfer. After July 1, 2008 this activity was recorded
        as a third party sale in the Handset segment.



                                   UTSTARCOM, INC.
                            May 4, 2010 Conference Call


            RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT
                                   ($ in millions)
                                     (Unaudited)

    To supplement our condensed consolidated financial statements presented on
    a GAAP basis, UTStarcom uses certain non-GAAP measures which are adjusted
    to present those metrics as if both PCD had been divested and the Korea
    handsets business had been wound down prior to each time period reflected
    below.  We believe this enables year over year comparisons to our recent
    financial results.  These adjustments to our GAAP results are made with
    the intent of providing both management and investors a more complete
    understanding of UTStarcom's underlying results and trends.  In addition,
    these adjusted non-GAAP results are among the information management uses
    as a basis for our planning and forecasting of future periods.  The
    presentation of this additional information is not meant to be considered
    in isolation or as a substitute for results prepared in accordance with
    generally accepted accounting principles in the United States.


                                  Year ended  Qtr ended  Qtr ended  Qtr ended
                                   31-Dec-08  31-Mar-09  30-Jun-09  30-Sep-09
                                  -------------------------------------------
    GAAP Gross Profit (a)             $261        $22       ($16)       $24
       GAAP Gross Margin %             16%        18%       (20%)       34%

    Less: PCD Segment
     Gross Profit (b)                  $69         --         --         --

    Less: Korea Handset Gross
     Profit from Sales to PCD (c)       $4         $3       ($28)        $2
                                  -------------------------------------------
    Non-GAAP Gross Profit             $188        $19        $12        $22
                                  ===========================================
       Non-GAAP Gross Margin %         30%        24%        14%        35%


                                         Qtr ended Year ended  Qtr ended
                                         31-Dec-09  31-Dec-09  31-Mar-10
                                  -------------------------------------------
    GAAP Gross Profit (a)                    $35        $65      $27.2
       GAAP Gross Margin %                   30%        17%        34%

    Less: PCD Segment
     Gross Profit (b)                         --        --          --

    Less: Korea Handset Gross
     Profit from Sales to PCD (c)             $2      ($21)       $0.6
                                  -------------------------------------------
    Non-GAAP Gross Profit                    $33       $86       $26.6
                                  ===========================================
       Non-GAAP Gross Margin %               32%       26%         34%


    (a) GAAP Gross Profit and GAAP Gross Margin % for each period is the
        consolidated gross profit and gross margin % as reported on Form 10-Q
        or Form 10-K, as applicable, for such period, except for the
        consolidated gross profit and gross margin % for the quarter ended
        March 31, 2010, which is derived from the unaudited Statements of
        Operations of the Company

    (b) Effective July 1, 2008 the PCD segment was divested by the Company.

    (c) Prior to the July 1, 2008 divestiture of PCD, Korea handset earned a
        gross profit on the intercompany transfer of inventory to PCD.
        This gross profit was recorded in the Handset segment.  After July 1,
        2008 this activity was recorded as a third party transaction.



                                  UTSTARCOM, INC.
                           May 4, 2010 Conference Call


        RECONCILIATION OF GAAP OPERATING EXPENSE TO NON-GAAP OPERATING EXPENSE
                                   ($ in millions)
                                     (Unaudited)

    To supplement our condensed consolidated financial statements presented on
    a GAAP basis, UTStarcom uses certain non-GAAP measures which are adjusted
    to present those metrics as if both PCD had been divested and the Korea
    handsets business had been wound down prior to each time period reflected
    below.  We believe this enables year over year comparisons to our recent
    financial results.  These adjustments to our GAAP results are made with
    the intent of providing both management and investors a more complete
    understanding of UTStarcom's underlying results and trends.  In addition,
    these adjusted non-GAAP results are among the information management uses
    as a basis for our planning and forecasting of future periods.  The
    presentation of this additional information is not meant to be considered
    in isolation or as a substitute for results prepared in accordance with
    generally accepted accounting principles in the United States.



                                  Year ended  Qtr ended  Qtr ended  Qtr ended
                                   31-Dec-08  31-Mar-09  30-Jun-09  30-Sep-09
                                  -------------------------------------------
    GAAP Operating Expense (a)        $437        $81        $70        $58

    Less: PCD Operating Expense (b)    $15         --         --         --

    Less: Korea Handset Operating
     Expense (c)                       $34         $3         $2         $1
                                  -------------------------------------------
    Non-GAAP Operating Expense        $388        $78        $68        $57
                                  ===========================================


                                         Qtr ended Year ended  Qtr ended
                                         31-Dec-09  31-Dec-09  31-Mar-10
                                  -------------------------------------------
    GAAP Operating Expense (a)               $76       $285      $46.0

    Less: PCD Operating Expense (b)           --         --         --

    Less: Korea Handset
     Operating Expense (c)                               $6       $0.0
                                  -------------------------------------------
    Non-GAAP Operating Expense               $76       $279      $46.0
                                  ===========================================


    (a) GAAP Operating Expense for each period is the consolidated operating
        expense as reported on Form 10-Q or Form 10-K, as applicable, for such
        period, except for the consolidated operating expense for the quarter
        ended March 31, 2010, which is derived from the unaudited Statements
        of Operations of the Company

    (b) Effective July 1, 2008 the PCD segment was divested by the Company.

    (c) Both prior to and after the July 1, 2008 divestiture of PCD, all
        direct operating expense relating to Korea handset has been recorded
        in the Handset segment.



                                   UTSTARCOM, INC.
                            May 4, 2010 Conference Call


        RECONCILIATION OF GAAP OPERATING LOSS TO NON-GAAP OPERATING LOSS
                                    ($ in millions)
                                      (Unaudited)

    To supplement our condensed consolidated financial statements presented on
    a GAAP basis, UTStarcom uses certain non-GAAP measures which are adjusted
    to present those metrics as if both PCD had been divested and the Korea
    handsets business had been wound down prior to each time period reflected
    below.  We believe this enables year over year comparisons to our recent
    financial results.  These adjustments to our GAAP results are made with
    the intent of providing both management and investors a more complete
    understanding of UTStarcom's underlying results and trends.  In addition,
    these adjusted non-GAAP results are among the information management uses
    as a basis for our planning and forecasting of future periods.  The
    presentation of this additional information is not meant to be considered
    in isolation or as a substitute for results prepared in accordance with
    generally accepted accounting principles in the United States.



                                Year ended  Qtr ended  Qtr ended  Qtr ended
                                 31-Dec-08  31-Mar-09  30-Jun-09  30-Sep-09
                                  -------------------------------------------
    GAAP Operating Loss (a)        ($176)      ($59)      ($85)      ($34)

    Less: PCD Operating Profit (b)   $53         --         --         --

    Less: Korea Handset
     Operating Income (Loss) (c)    ($30)        --       ($30)        $1
                                  -------------------------------------------
    Non-GAAP Operating Loss        ($199)      ($59)      ($55)      ($35)
                                  ===========================================



                                      Qtr ended  Year ended  Qtr ended
                                      31-Dec-09   31-Dec-09  31-Mar-10
                                  -------------------------------------------
    GAAP Operating Loss (a)              ($41)      ($219)    ($18.8)

    Less:  PCD Operating Profit (b)        --          --         --

    Less: Korea Handset
     Operating Income (Loss) (c)           $2        ($27)      $0.6
                                  -------------------------------------------
    Non-GAAP Operating Loss              ($43)      ($192)    ($19.4)
                                  ===========================================


    (a) GAAP Operating Loss for each period is the consolidated operating loss
        as reported on Form 10-Q or Form 10-K, as applicable, for such period,
        except for the consolidated operating loss for the quarter ended March
        31, 2010, which is derived from the unaudited Statements of Operations
        of the Company

    (b) Effective July 1, 2008 the PCD segment was divested by the Company.

    (c) Both prior to and after the July 1, 2008 divestiture of PCD, the
        operating loss relating to Korea handset has been recorded in the
        Handset segment.


                                   UTSTARCOM, INC.
                            May 4, 2010 Conference Call


                       ABBREVIATED NON-GAAP P&L STATEMENT (a)
                                    ($ in millions)
                                      (Unaudited)

    To supplement our condensed consolidated financial statements presented on
    a GAAP basis, UTStarcom uses certain non-GAAP measures which are adjusted
    to present those metrics as if both PCD had been divested and the Korea
    handsets business had been wound down prior to each time period reflected
    below.  We believe this enables year over year comparisons to our recent
    financial results.  These adjustments to our GAAP results are made with
    the intent of providing both management and investors a more complete
    understanding of UTStarcom's underlying results and trends.  In addition,
    these adjusted non-GAAP results are among the information management uses
    as a basis for our planning and forecasting of future periods.  The
    presentation of this additional information is not meant to be considered
    in isolation or as a substitute for results prepared in accordance with
    generally accepted accounting principles in the United States.



                                  Year ended  Qtr ended  Qtr ended  Qtr ended
                                   31-Dec-08  31-Mar-09  30-Jun-09  30-Sep-09
                                  -------------------------------------------
    Non-GAAP Revenue                  $634        $80        $83        $63

    Non-GAAP Gross Profit              188        $19        $12        $22
       Non-GAAP Gross Margin %         30%        24%        14%        35%

    Non-GAAP Operating Expense         388        $78        $68        $57
                                  -------------------------------------------
    Non-GAAP Operating Loss          ($199)      ($59)      ($55)      ($35)
                                  ===========================================



                                          Qtr ended  Year ended  Qtr ended
                                          31-Dec-09   31-Dec-09  31-Mar-10
                                  -------------------------------------------
    Non-GAAP Revenue                         $104        $330      $78.3

    Non-GAAP Gross Profit                     $33         $86      $26.6
       Non-GAAP Gross Margin %                32%         26%        34%

    Non-GAAP Operating Expense                $76        $279      $46.0
                                   -------------------------------------------
    Non-GAAP Operating Loss                  ($43)      ($192)    ($19.4)
                                  ===========================================


    (a) Please refer to the preceding reconciliation tables for the
        adjustments to GAAP Revenue, Gross Profit, Operating Expense and
        Operating Loss.

SOURCE UTStarcom, Inc.