Choose your language

UTStarcom Releases Financial Results for the Second Quarter of 2008

ALAMEDA, Calif., Aug. 6 /PRNewswire-FirstCall/ -- UTStarcom, Inc.
(Nasdaq: UTSI), today reported financial results for the second quarter of
2008. Net sales for the second quarter of 2008 were $633 million as compared
to $538 million in the second quarter of 2007 representing an 18% increase.
The Personal Communications Division ('PCD') revenues for the second quarter
of 2008 were $449 million as compared to $358 million in the second quarter of
2007. Gross margins for the second quarter of 2008 were 13.0% as compared to
14.8% in the second quarter of 2007. The operating loss for the second
quarter of 2008 was $31.1 million as compared to an operating loss of $55.3
million in the second quarter of 2007. This improvement was primarily due to
a $22 million reduction in operating expenses. The net loss for the second
quarter of 2008 was $38.8 million, or ($0.31) per share, as compared to a net
loss of $61.7 million, or ($0.51) per share in the second quarter of 2007.

UTStarcom Releases Financial Results for the Second Quarter of 2008
UTStarcom Releases Financial Results for the Second Quarter of 2008

Second Quarter 2008 Total Revenues of $633 Million


Cash, cash equivalents and short term investments were $255 million at
quarter end, while the total debt was $29 million. These balance sheet items
do not include the proceeds received from completing the divestiture of PCD on
July 1, 2008. On July 1, the company closed the divestiture of PCD for
expected proceeds of approximately $240 million subject to certain
adjustments. Of this amount, the company received approximately $216 million
in cash with the balance of approximately $24 million held in escrow accounts.

'In the second quarter we continued to execute on the strategic plan laid
out in late 2007. We recently closed a significant divestiture which provides
us with the liquidity to execute the next phase of that plan. Strategically,
we are now focused primarily on delivering IP-based products to the world's
fastest growing economies,' said
Peter Blackmore, UTStarcom's chief executive
officer and president. 'We are also taking further action to adjust the
operating model of the company consistent with our new structure. The results
of these efforts will become evident as we move forward in late 2008 and into

Q3 2008 Guidance

Given the recent changes to the company's structure, management will
provide third quarter financial guidance during the conference call.

Conference Call

The company will host a conference call to discuss the results. The call
will take place at 2:00 p.m. (PDT) / 5:00 p.m. (EDT) on August 6, 2008. The
conference call dial-in numbers are as follows: United States / Canada -- 877-
405-9548; International -- 706-679-7496. The conference ID number is 5823-

A replay of the call will be available for 30 days. The conference call
replay numbers are as follows: United States / Canada -- 800-642-1687;
International -- 706-645-9291. The Access Code is 5823-3299.

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:

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.

About UTStarcom, Inc.

UTStarcom is a global leader in IP-based, end-to-end networking solutions
and international service and support. The company develops, manufactures and
markets its broadband, wireless, and terminal solutions to network operators
in both emerging and established telecommunications markets worldwide.
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. UTStarcom was founded in 1991 and
is headquartered in Alameda, California. The company has research and
development centers in the USA, Canada, China, Korea and India.

For more information about UTStarcom, please visit the UTStarcom Web site

Forward-Looking Statements

This release includes forward-looking statements, including the foregoing
statements regarding the company's plans to adjust its operating model and
expectations with respect to anticipated future results. 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 and
execute on its liquidity plans 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.

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

                                                  June 30,        December 31,
                                                    2008              2007
    Current assets:
      Cash, cash equivalents and short-term
       investments                                $254,790          $503,078
      Accounts and notes receivable, net           153,445           343,525
      Inventories and deferred costs               342,958           524,727
      Assets held for sale                         373,929                 -
      Prepaids and other current assets            139,187           121,636
        Total current assets                     1,264,309         1,492,966
    Long-term assets:
      Property, plant and equipment, net           207,259           209,094
      Long-term deferred costs                     161,919           164,766
      Other long-term assets                       102,089           117,762
        Total assets                            $1,735,576        $1,984,588

    Current liabilities:
      Accounts payable                            $179,984          $148,440
      Short-term debt                               29,158           322,829
      Customer advances                            192,331           229,050
      Deferred revenue                             111,219           100,502
      Liabilities held for sale                    154,953                 -
      Other current liabilities                    230,933           302,395
        Total current liabilities                  898,578         1,103,216
    Long-term liabilities:
      Long-term debt                                     -               333
      Long-term deferred revenue and other
       liabilities                                 248,365           259,358
        Total liabilities                        1,146,943         1,362,907

    Minority interest in consolidated
     subsidiaries                                      796             3,705
    Total stockholders' equity                     587,837           617,976
        Total liabilities, minority interest
         and stockholders' equity               $1,735,576        $1,984,588

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

                                   Three months ended     Six months ended
                                        June 30,               June 30,
                                     2008      2007       2008        2007

    Net sales                      $632,756  $538,245  $1,218,745  $1,014,146
    Cost of net sales               550,808   458,515   1,044,718     859,132
    Gross profit                     81,948    79,730     174,027     155,014

    Operating expenses:
      Selling, general and
       administrative                72,010    88,865     151,754     168,701
      Research and development       39,286    42,158      80,686      85,819
      Amortization of intangible
       assets                         1,730     4,046       3,554       8,092
    Total operating expenses        113,026   135,069     235,994     262,612

    Operating loss                  (31,078)  (55,339)    (61,967)   (107,598)

    Interest expense, net            (2,167)   (3,926)     (5,421)     (5,742)
    Other income (expense), net        (920)      158      53,050       4,129
    Loss before income taxes and
     minority interest              (34,165)  (59,107)    (14,338)   (109,211)
    Income taxes                     (4,625)   (3,298)        395      (7,640)
    Minority interest in losses of
     consolidated subsidiaries           10       698         520       1,161
    Net loss                       $(38,780) $(61,707)   $(13,423)  $(115,690)

    Loss per share - Basic and
     diluted                         $(0.31)   $(0.51)     $(0.11)     $(0.96)

    Weighted average shares used
     in per share calculation:
     - Basic and diluted            123,119   120,982     122,608     120,941

                                 UTStarcom, Inc.
                      Consolidated Statements of Cash Flows
                                  (in thousands)

                                                   Six months ended June 30,
                                                    2008                2007

    Net loss                                     $(13,423)          $(115,690)
    Adjustments to reconcile net loss to
     net cash provided by (used in)
     operating activities:
      Depreciation and amortization                19,904              29,737
      Gain on sale of investments and
       liquidation of ownership interest in a
       variable interest entity                   (48,375)               (366)
      Net gain on sale of fixed assets                (85)             (2,629)
      Stock-based compensation expense              9,844               4,939
      Provision for doubtful accounts               2,722               2,370
      Provision for (recovery of) deferred
       costs                                        9,089              (8,136)
      Deferred income taxes                       (11,541)              1,267
      Other                                         2,185                (366)
      Changes in operating assets and
        Accounts receivable                        65,081              84,696
        Inventories                               (69,513)            (19,369)
        Deferred costs                             42,747              31,563
        Other assets                               (5,513)            (28,637)
        Accounts payable                          116,453             (89,502)
        Income taxes payable                        3,800               6,801
        Customer advances                         (16,503)             27,141
        Deferred revenue                           (7,025)            (23,982)
        Other current liabilities                 (39,986)            (49,135)
          Net cash provided by (used in)
           operating activities                    59,861            (149,298)
      Additions to property, plant and equipment  (10,271)            (15,425)
      (Purchase of) proceeds from the
       disposition of an investment interest       (2,244)              1,800
      Proceeds from repayment of loan by a
       variable interest entity                     7,728                   -
      Change in restricted cash                    (6,506)              6,615
      Purchase of short-term investments           (8,567)            (21,735)
      Proceeds from sale of short-term
       investments                                 66,580              13,484
      Other                                           143                (230)
        Net cash provided by (used in)
         investing activities                      46,863             (15,491)
      Proceeds from borrowings                     50,000              64,621
      Payments on borrowings                     (346,017)            (64,732)
      Other                                        (3,637)              4,728
        Net cash (used in) provided by
         financing activities                    (299,654)              4,617
    Effect of exchange rate changes on
     cash and cash equivalents                      9,382               7,972
        Net decrease in cash and cash
         equivalents                             (183,548)           (152,200)
    Cash and cash equivalents at beginning
     of period                                    437,449             661,623
    Cash and cash equivalents at end of
     period                                      $253,901            $509,423

SOURCE UTStarcom, Inc.