Investor Relations
UTStarcom Releases Financial Results for the First Quarter of 2009
ALAMEDA, Calif., May 7 /PRNewswire-FirstCall/ -- UTStarcom, Inc. (Nasdaq: UTSI), today reported financial results for the first quarter ended March 31, 2009.
UTStarcom Releases Financial Results for the First Quarter of 2009
(Logo: http://www.newscom.com/cgi-bin/prnh/20051013/SFTH063LOGO)
On
GAAP Results
Net sales for the first quarter of 2009 were
The net loss for the first quarter of 2009 was
Net cash, cash equivalents and short-term investments as of
'Although the first quarter revenue was slightly below our expectations we are encouraged by the first quarter bookings which indicate continued demand for our products. Additionally, our quarter end cash balance was well above the level we previously anticipated,' said
Mr. Blackmore added, 'In order to accelerate our return to profitability we expect to announce further significant initiatives later this month.'
Significant Items Impacting the First Quarter 2009 and 2008 Results
The following significant items negatively affected the first quarter 2009 operating loss:
- A net increase of
$4.9 million in inventory reserves due to the anticipated decline in demand for PAS handsets. - A charge of
$8.1 million relating to one customer consisting of a$1.5 million inventory reserve and a$6.6 million increase in allowance for doubtful accounts receivables. - A
$4.8 million restructuring charge related to the initiatives announced inDecember 2008 .
The net gain in the first quarter 2008 includes the positive impact of certain significant items including
Pro Forma Non-GAAP Results
The first quarter 2009 pro forma non-GAAP revenue and gross margins were
The significant items outlined above also negatively impacted the first quarter pro forma non-GAAP results.
Conference Call
The call will take place at
A replay of the call will be available for 30 days. The conference call replay numbers are as follows:
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 Pro Forma Non-GAAP Financial Measures
In order to provide both management and investors with a more complete understanding of UTStarcom's underlying results and trends in light of the PCD divestiture and planned wind down of its Korea-based handset manufacturing operations, UTStarcom has prepared reconciliation tables for comparing GAAP results to non-GAAP measures of revenues, gross profits, operating expenses and operating profit (loss), along with an abbreviated, pro forma non-GAAP profit and loss statement based on these non-GAAP measures. The pro forma non-GAAP measures present the Company's results as if both the
In addition, these pro forma 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
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
Forward-Looking Statements
This release includes forward-looking statements relating to, among other things, the Company's strategy to become profitable (including the timing of announcement and execution of further initiatives), future expected financial results, anticipated liquidity, capital expenditure requirements and the expected investment in the Company's IP-based product portfolio. Forward-looking statements are generally indicated by such words as 'will,' 'expects,' 'estimates,' 'goals,' 'plans' or similar words. 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 from operational improvements, finalize plans for additional initiatives, increase bookings 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.
UTStarcom, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
March 31, December 31,
2009 2008
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $300,534 $313,865
Accounts and notes receivable, net 99,504 169,496
Inventories and deferred costs 296,731 304,716
Prepaids and other current assets 113,527 144,515
------- -------
Total current assets 810,296 932,592
Long-term assets:
Property, plant and equipment, net 172,122 175,287
Long-term deferred costs 142,246 149,258
Other long-term assets 48,955 53,669
------ ------
Total assets $1,173,619 $1,310,806
========== ==========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $102,233 $176,384
Customer advances 160,659 144,700
Deferred revenue 123,880 117,584
Other current liabilities 176,940 181,852
------- -------
Total current liabilities 563,712 620,520
Long-term liabilities:
Long-term deferred revenue and other
liabilities 205,678 222,644
------- -------
Total liabilities 769,390 843,164
Total equity 404,229 467,642
------- -------
Total liabilities and equity $1,173,619 $1,310,806
========== ==========
UTStarcom, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three months
ended March 31,
----------------
2009 2008
---- ----
Net sales $119,340 $585,989
Cost of net sales 97,688 493,910
------ -------
Gross profit 21,652 92,079
------ ------
Operating expenses:
Selling, general and administrative 54,180 79,744
Research and development 21,508 41,400
Amortization of intangible assets - 1,824
Restructuring charges 4,819 -
------ -------
Total operating expenses 80,507 122,968
------ -------
Operating loss (58,855) (30,889)
------- -------
Interest income (expense), net 459 (3,254)
Other (expense) income (7,214) 53,970
------ ------
(Loss) income before income taxes (65,610) 19,827
Income taxes (expense) benefit (1,824) 5,020
------ -----
Net (loss) income (67,434) 24,847
Net loss attributable to noncontrolling interest 1 510
--- ---
Net (loss) income attributable to UTStarcom, Inc. $(67,433) $25,357
======== =======
Net (loss) income per share attributable to
UTStarcom, Inc. - Basic and Diluted $(0.54) $0.21
Weighted average shares used in per share
calculation:
- Basic 125,731 122,096
======= =======
- Diluted 125,731 123,098
======= =======
UTStarcom, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
3 months ended 3 months ended
March 31, March 31,
2009 2008
--------------- ---------------
Net cash (used in) provided by
operating activities $(12,007) $92,734
-------- -------
Cash flows from investing activities:
Property, plant and equipment, net (1,055) (7,630)
Purchase of an investment interest - (1,949)
Proceeds from repayment of loan by
a variable interest entity - 7,728
Change in restricted cash 2,068 (4,517)
Short-term investments, net 3,286 52,162
Other 301 96
--- --
Net cash provided by investing
activities 4,600 45,890
----- ------
Cash flows from financing activities:
Payments on borrowings - (288,861)
Other (163) 2,473
---- -----
Net cash used in financing activities (163) (286,388)
Effect of exchange rate changes on
cash and cash equivalents (2,463) 8,797
------ -----
Net decrease in cash and cash
equivalents (10,033) (138,967)
Cash and cash equivalents at
beginning of period 309,603 437,449
------- -------
Cash and cash equivalents at end of
period $299,570 $298,482
======== ========
UTSTARCOM, INC.
May 7, 2009 Conference Call
RECONCILIATION OF GAAP REVENUE TO PRO FORMA NON-GAAP REVENUE
($ in millions)
(Unaudited)
To supplement our condensed consolidated financial statements presented
on a GAAP basis, UTStarcom uses certain pro forma 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 pro forma 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.
Qtr Qtr Qtr Qtr Year Qtr
ended ended ended ended ended ended
31- 30- 30- 31- 31- 31-
Mar- Jun- Sep- Dec- Dec- Mar-
08 08 08 08 08 09
---- ---- ---- ---- ---- ----
GAAP Revenue (a) $586 $633 $181 $241 $1,641 $119
Less: PCD Segment
Revenue (b) 431 449 - - 880 -
Less: Korea
Handset Sales to
PCD (c) - - 35 92 127 39
---- ---- ---- ---- ---- ---
Non-GAAP Revenue $155 $184 $146 $149 $634 $80
==== ==== ==== ==== ==== ===
(a) GAAP Revenue for each period is the consolidated revenue as
reported on Form 10-Q or Form 10-K, as applicable, for such
period, except for the consolidated revenue for the quarter
ended December 31, 2008, which is derived from the revenue reported
in the Form 10-Qs and Form 10-K with respect to fiscal year 2008.
(b) Effective July 1, 2008 the PCD segment was divested by the Company.
(c) Prior to the July 1, 2008 divestiture of PCD, Korea handset did not
record revenue for units shipped to PCD as this activity was an
intercompany transfer. After July 1, 2008 this activity was recorded
as a third party sale in the Handset segment.
UTSTARCOM, INC.
May 7, 2009 Conference Call
RECONCILIATION OF GAAP GROSS PROFIT TO PRO FORMA NON-GAAP GROSS PROFIT
($ in millions)
(Unaudited)
Qtr Qtr Qtr Qtr Year Qtr
ended ended ended ended ended ended
31- 30- 30- 31- 31- 31-
Mar- Jun- Sep- Dec- Dec- Mar-
08 08 08 08 08 09
---- ---- ---- ---- ---- ----
GAAP Gross
Profit (a) $92 $82 $57 $30 $261 $22
GAAP Gross
Margin % 16% 13% 31% 12% 16% 18%
Less: PCD Segment
Gross Profit (b) 33 36 - - 69 -
Less: Korea
Handset
Gross
Profit from
Sales to
PCD (c) 2 0 6 (4) 4 3
--- --- -- --- ---- ---
Non-GAAP
Gross
Profit $57 $46 $51 $34 $188 $19
=== === === === ==== ===
Non-GAAP
Gross
Margin % 37% 25% 35% 23% 30% 24%
(a) GAAP Gross Profit and GAAP Gross Margin % for each period is the
consolidated gross profit and gross margin % as reported on Form
10-Q or Form 10-K, as applicable, for such period, except for the
consolidated gross profit and gross margin % for the quarter ended
December 31, 2008, which is derived from the gross profit and gross
margin % reported in the Form 10-Qs and Form 10-K with respect to
fiscal year 2008.
(b) Effective July 1, 2008 the PCD segment was divested by the Company.
(c) Prior to the July 1, 2008 divestiture of PCD, Korea handset earned a
gross profit on the intercompany transfer of inventory to PCD. This
gross profit was recorded in the Handset segment. After July 1, 2008
this activity was recorded as a third party transaction.
UTSTARCOM, INC.
May 7, 2009 Conference Call
RECONCILIATION OF GAAP OPERATING EXPENSE TO PRO FORMA NON-GAAP
OPERATING EXPENSE
($ in millions)
(Unaudited)
To supplement our condensed consolidated financial statements presented
on a GAAP basis, UTStarcom uses certain pro forma 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 pro forma 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.
Qtr Qtr Qtr Qtr Year Qtr
ended ended ended ended ended ended
31- 30- 30- 31- 31- 31-
Mar- Jun- Sep- Dec- Dec- Mar-
08 08 08 08 08 09
---- ---- ---- ---- ---- ----
GAAP Operating
Expense (a) $123 $113 $92 $109 $437 $81
Less: PCD Operating
Expense (b) 8 7 - - 15 -
Less: Korea Handset
Operating Expense
(c) 9 10 10 5 34 3
---- --- --- ---- ---- ---
Non-GAAP Operating
Expense $106 $96 $82 $104 $388 $78
==== === === ==== ==== ===
(a) GAAP Operating Expense for each period is the consolidated operating
expense as reported on Form 10-Q or Form 10-K, as applicable, for such
period, except for the consolidated operating expense for the quarter
ended December 31, 2008, which is derived from the operating expenses
reported in the Form 10-Qs and Form 10-K with respect to the fiscal
year 2008.
(b) Effective July 1, 2008 the PCD segment was divested by the Company.
(c) Both prior to and after the July 1, 2008 divestiture of PCD, all
direct operating expense relating to Korea handset has been
recorded in the Handset segment.
UTSTARCOM, INC.
May 7, 2009 Conference Call
RECONCILIATION OF GAAP OPERATING LOSS TO PRO FORMA NON-GAAP
OPERATING LOSS
($ in millions)
(Unaudited)
To supplement our condensed consolidated financial statements presented
on a GAAP basis, UTStarcom uses certain pro forma 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 pro forma 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.
Qtr Qtr Qtr Qtr Year Qtr
ended ended ended ended ended ended
31- 30- 30- 31- 31- 31-
Mar- Jun- Sep- Dec- Dec- Mar-
08 08 08 08 08 09
---- ---- ---- ---- ---- ----
GAAP
Operating
Loss (a) ($31) ($31) ($35) ($79) ($176) ($59)
Less: PCD
Operating
Profit (b) 25 28 - - 53 -
Less: Korea
Handset
Operating
Loss (c) (7) (10) (4) (9) (30) -
---- ---- ---- ---- ----- ----
Non-GAAP
Operating
Loss ($49) ($49) ($31) ($70) ($199) ($59)
==== ==== ==== ==== ===== ====
(a) GAAP Operating Loss for each period is the consolidated operating
loss as reported on Form 10-Q or Form 10-K, as applicable, for such
period, except for the consolidated operating loss for the quarter
ended December 31, 2008, which is derived from the operating loss
reported in the Form 10-Qs and Form 10-K with respect to fiscal
year 2008.
(b) Effective July 1, 2008 the PCD segment was divested by the Company.
(c) Both prior to and after the July 1, 2008 divestiture of PCD, the
operating loss relating to Korea handset has been recorded in
the Handset segment.
UTSTARCOM, INC.
May 7, 2009 Conference Call
ABBREVIATED PRO FORMA NON-GAAP P&L STATEMENT (a)
($ in millions)
(Unaudited)
To supplement our condensed consolidated financial statements presented
on a GAAP basis, UTStarcom uses certain pro forma 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 pro forma 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.
Qtr Qtr Qtr Qtr Year Qtr
ended ended ended ended ended ended
31- 30- 30- 31- 31- 31-
Mar- Jun- Sep- Dec- Dec- Mar-
08 08 08 08 08 09
---- ---- ---- ---- ---- ----
Non-GAAP Revenue $155 $184 $146 $149 $634 $80
Non-GAAP Gross
Profit 57 46 51 34 188 19
Non-GAAP Gross
Margin % 37% 25% 35% 23% 30% 24%
Non-GAAP
Operating Expense 106 96 82 104 388 78
---- ---- ---- ---- ----- ----
Non-GAAP
Operating Loss ($49) ($49) ($31) ($70) ($199) ($59)
==== ==== ==== ==== ===== ====
(a) Please refer to the preceding reconciliation tables for the
adjustments to GAAP Revenue, Gross Profit, Operating Expense
and Operating Loss.
SOURCE UTStarcom, Inc.