IR/インベスターリレーションズ
UTStarcom Releases Financial Results for the Third Quarter of 2009
Nov. 5, 2009 (PR Newswire) -- ALAMEDA, Calif., Nov. 5 /PRNewswire-FirstCall/ -- UTStarcom, Inc. (Nasdaq: UTSI), today reported financial results for the third quarter ended September 30, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20051013/SFTH063LOGO)
"The third quarter was a time of transition for our company as we worked aggressively to execute the corporate initiatives we announced in June," said Peter Blackmore, UTStarcom's chief executive officer and president. "We have implemented significant changes that enable us to invest in selective IP-based infrastructure products and key geographic regions. Meanwhile we continue to improve our operational structure so we can achieve our financial goals in 2010 and beyond."
GAAP Results
Net sales for the third quarter of 2009 were $70.5 million as compared to $180.6 million in the third quarter of 2008. The decline in sales primarily reflects the China market's continued wind down of the PAS infrastructure and handset businesses. Gross margins for the third quarter of 2009 were 34% as compared to 32% in the third quarter of 2008. The third quarter 2009 operating expenses were $58.0 million compared to $92.2 million a year ago. The reduction in expenses primarily reflects the benefits of ongoing restructuring and cost cutting initiatives. The operating loss for the third quarter of 2009 and 2008 was $33.8 million and $34.9 million, respectively.
The net loss for the third quarter of 2009 was $34.6 million, or ($0.27) per share, and includes $8.9 million in charges primarily related to the restructuring actions announced in June. The third quarter of 2008 net loss was $55.9 million, or ($0.45) per share.
Cash, cash equivalents and short-term investments as of September 30, 2009 was $241.7 million compared to $313.9 million on December 31, 2008.
The following significant items affected the third quarter 2009 GAAP gross margins:
-- A benefit of $6.5 million primarily related to the sale of handsets to
PCD that were written down in prior periods.
The following significant items affected the third quarter 2009 GAAP operating expenses:
-- An $8.9 million restructuring charge primarily related to restructuring
initiatives announced in June 2009.
-- A $1.7 million loss related to the divestiture of Korea based handset
operations.
Pro Forma 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 pro forma 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 third quarter 2009 pro forma non-GAAP revenue and gross margins were $63 million and 35%, respectively. This compares to non-GAAP revenue and gross margins of $146 million and 35% in the third quarter of 2008. The decrease in pro forma non-GAAP revenues primarily reflects the expected ongoing decline in our PAS businesses. The third quarter 2009 pro forma non-GAAP operating expenses were $57 million compared to $82 million reflecting the benefits of ongoing restructuring and cost cutting initiatives. The third quarter 2009 pro forma non-GAAP operating loss was $35 million compared to $31 million a year ago.
Conference Call
The call will take place at 2:00 p.m. (PST) / 5:00 p.m. (EST) on November 5, 2009. The conference call dial-in numbers are as follows: United States -- 888-889-1058; International -- 706-634-2327. The conference ID number is 3785-3360.
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 3785-3360.
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
On July 1, 2008, the Company divested its Personal Communications Division ("PCD") which has historically represented a significant portion of the Company's revenues. On December 18, 2008, 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 basis the Company has prepared certain pro forma 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 pro forma non-GAAP financial measures is provided at the end of this press release and on the Company's website.
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 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 July 2008 divestiture of the Company's Personal Communications Division and the wind down of the Company's Korea-based handset operations were completed prior to each time period presented.
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 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. The Company was founded in 1991 and is headquartered in Alameda, California. 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 relating to, among other things, the Company's plan to reduce operating expenses, future expected financial results, investment in selective products and geographic regions and transition to a new business model. 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 effectively institute operational improvements, increase sales and bookings and competitive pressures 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. 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.
CONTACT:
Barry Hutton,
Senior Director, Investor Relations
UTStarcom, Inc.,
+1-510-769-2807, barry.hutton@utstar.com
UTStarcom, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
September 30, December 31,
2009 2008
---- ----
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $241,656 $313,865
Accounts and notes receivable, net 54,856 169,496
Inventories (1) 167,452 189,832
Deferred costs 114,864 114,884
Prepaids and other current assets 84,363 144,515
------ -------
Total current assets 663,191 932,592
Long-term assets:
Property, plant and equipment, net 166,640 175,287
Long-term deferred costs 134,013 149,258
Other long-term assets 40,234 53,669
------ ------
Total assets $1,004,078 $1,310,806
========== ==========
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $45,331 $176,384
Customer advances 187,906 144,700
Deferred revenue 111,075 117,584
Other current liabilities 161,668 181,852
------- -------
Total current liabilities 505,980 620,520
Long-term liabilities:
Long-term deferred revenue and other
liabilities 201,042 222,644
------- -------
Total liabilities 707,022 843,164
Total equity 297,056 467,642
------- -------
Total liabilities and equity $1,004,078 $1,310,806
========== ==========
(1) Includes finished goods at customer sites of approximately $140.6
million and $138.0 million at September 30, 2009 and December 31,
2008, respectively, for which the customer has taken possession, but
based on specific contractual terms, title has not yet passed to the
customer.
UTStarcom, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Net sales $70,504 $180,607 $270,007 $1,399,352
Cost of net sales 46,315 123,280 240,004 1,167,998
------ ------- ------- ---------
Gross profit 24,189 57,327 30,003 231,354
------ ------ ------ -------
Operating expenses:
Selling, general and
administrative 33,139 59,445 114,290 211,199
Research and development 14,246 35,971 51,983 116,657
Amortization of intangible
assets - 279 - 3,833
Loss (gain) on divestiture 1,689 (3,455) 332 (3,455)
Restructuring charges 8,909 - 41,485 -
------ ------ ------- -------
Total operating expenses 57,983 92,240 208,090 328,234
------ ------ ------- -------
Operating loss (33,794) (34,913) (178,087) (96,880)
------- ------- -------- -------
Interest income (expense), net 438 1,697 1,266 (3,724)
Other (expense) income, net (1,556) (14,943) (3,341) 38,107
------ ------- ------ ------
Loss before income tax (34,912) (48,159) (180,162) (62,497)
Income tax benefit (expense) 317 (7,791) (6,166) (7,396)
--- ------ ------ ------
Net loss (34,595) (55,950) (186,328) (69,893)
Net loss attributable to
noncontrolling interest 15 6 32 526
--- --- --- ---
Net loss attributable to
UTStarcom, Inc. $(34,580) $(55,944) $(186,296) $(69,367)
======== ======== ========= ========
Net loss per share
attributable to UTStarcom,
Inc. - Basic and Diluted $(0.27) $(0.45) $(1.47) $(0.56)
Weighted average shares used
in per share calculation-
Basic and Diluted 127,875 123,884 126,930 123,036
======= ======= ======= =======
Nine months ended September 30,
2009 2008
---- ----
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(186,328) $(69,893)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 10,177 30,603
Loss (gain) on divestiture, sale of
investments and liquidation of
ownership interest in a variable
interest entity 332 (51,830)
Other-than-temporary impairment
of equity investment 5,517 4,308
Stock-based compensation expense 9,434 13,930
(Recovery of) provision for
doubtful accounts (3,659) 220
Deferred income taxes 2,341 (7,921)
Other (634) (27)
Changes in operating assets
and liabilities:
Accounts receivable 108,947 60,894
Inventories and deferred costs 40,512 (13,046)
Other assets 62,380 (5,729)
Accounts payable (132,005) 80,316
Income taxes payable 2,200 8,476
Customer advances 41,116 (34,219)
Deferred revenue (33,775) (5,088)
Other liabilities (15,757) (42,866)
------- -------
Net cash used in operating
activities (89,202) (31,872)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant
and equipment (1,651) (12,671)
Proceeds from the disposition of
(purchase of) an investment interest 1,600 (3,841)
Proceeds from repayment of loan
by a variable interest entity - 7,728
Net proceeds from divestitures 11,508 207,097
Change in restricted cash 1,895 (10,380)
Purchase of short-term investments (6,514) (9,778)
Proceeds from sale of short-term
investments 7,625 67,284
Other 437 245
--- ---
Net cash provided by investing
activities 14,900 245,684
------ -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of stock, net of expenses 367 1,150
Proceeds from borrowings - 50,000
Payments on borrowings - (375,317)
Other (755) (9,057)
---- ------
Net cash used in financing
activities (388) (333,224)
Effect of exchange rate changes on
cash and cash equivalents 2,199 10,932
----- ------
Net decrease in cash and
cash equivalents (72,491) (108,480)
Cash and cash equivalents at
beginning of period 309,603 437,449
------- -------
Cash and cash equivalents at
end of period $237,112 $328,969
======== ========
Supplemental disclosure of
cash flow information:
Non-cash operating activity:
Accounts receivable transferred
to notes receivable $2,467 $18,487
UTSTARCOM, INC.
November 5, 2009 Conference Call
RECONCILIATION OF GAAP REVENUE TO PRO FORMA NON-GAAP REVENUE
($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 ended Qtr ended Qtr ended Qtr ended Year ended
31-Mar-08 30-Jun-08 30-Sep-08 31-Dec-08 31-Dec-08
GAAP Revenue (a) $586 $633 $181 $241 $1,641
Less: PCD Segment
Revenue (b) 431 449 - - 880
Less: Korea Handset
Sales to PCD (c) - - 35 92 127
--- --- --- --- ---
Non-GAAP Revenue $155 $184 $146 $149 $634
=== === === === ===
Qtr ended Qtr ended Qtr ended
31-Mar-09 30-Jun-09 30-Sep-09
GAAP Revenue (a) $119 $80 $71
Less: PCD Segment
Revenue (b) - - -
Less: Korea Handset
Sales to PCD (c) 39 (3) 8
--- --- ---
Non-GAAP Revenue $80 $83 $63
=== === ===
(a) GAAP Revenue for each period is the consolidated revenue as reported
on Form 10-Q or Form 10-K, as applicable, for such period, except for
the consolidated revenue for the quarter ended December 31, 2008,
which is derived from the revenue reported in the Form 10-Qs and Form
10-K with respect to fiscal year 2008.
(b) Effective July 1, 2008 the PCD segment was divested by the Company.
(c) Prior to the July 1, 2008 divestiture of PCD, Korea handset did not
record revenue for units shipped to PCD as this activity was an
intercompany transfer. After July 1, 2008 this activity was recorded
as a third party sale in the Handset segment.
UTSTARCOM, INC.
November 5, 2009 Conference Call
RECONCILIATION OF GAAP GROSS PROFIT TO PRO FORMA NON-GAAP GROSS PROFIT
($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 ended Qtr ended Qtr ended Qtr ended Year ended
31-Mar-08 30-Jun-08 30-Sep-08 31-Dec-08 31-Dec-08
GAAP Gross Profit (a) $92 $82 $57 $30 $261
GAAP Gross Margin % 16% 13% 31% 12% 16%
Less: PCD Segment
Gross Profit (b) 33 36 - - 69
Less: Korea Handset
Gross Profit from
Sales to PCD (c) 2 - 6 (4) 4
--- --- --- --- ---
Non-GAAP Gross Profit $57 $46 $51 $34 $188
=== === === === ===
Non-GAAP Gross
Margin % 37% 25% 35% 23% 30%
Qtr ended Qtr ended Qtr ended
31-Mar-09 30-Jun-09 30-Sep-09
GAAP Gross Profit (a) $22 ($16) $24
GAAP Gross Margin % 18% (20%) 34%
Less: PCD Segment
Gross Profit (b) - - -
Less: Korea Handset
Gross Profit from
Sales to PCD (c) 3 (28) 2
--- --- ---
Non-GAAP Gross Profit $19 $12 $22
=== === ===
Non-GAAP Gross
Margin % 24% 14% 35%
(a) GAAP Gross Profit and GAAP Gross Margin % for each period is the
consolidated gross profit and gross margin % as reported on Form 10-Q
or Form 10-K, as applicable, for such period, except for the
consolidated gross profit and gross margin % for the quarter ended
December 31, 2008, which is derived from the gross profit and gross
margin % reported in the Form 10-Qs and Form 10-K with respect to
fiscal year 2008.
(b) Effective July 1, 2008 the PCD segment was divested by the Company.
(c) Prior to the July 1, 2008 divestiture of PCD, Korea handset earned a
gross profit on the intercompany transfer of inventory to PCD.
This gross profit was recorded in the Handset segment. After July 1,
2008 this activity was recorded as a third party transaction.
UTSTARCOM, INC.
November 5, 2009 Conference Call
RECONCILIATION OF GAAP OPERATING EXPENSE
TO PRO FORMA NON-GAAP OPERATING EXPENSE
($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 ended Qtr ended Qtr ended Qtr ended Year ended
31-Mar-08 30-Jun-08 30-Sep-08 31-Dec-08 31-Dec-08
GAAP Operating
Expense (a) $123 $113 $92 $109 $437
Less: PCD Operating
Expense (b) 8 7 - - 15
Less: Korea Handset
Operating Expense (c) 9 10 10 5 34
--- --- --- --- ---
Non-GAAP Operating
Expense $106 $96 $82 $104 $388
=== === === === ===
Qtr ended Qtr ended Qtr ended
31-Mar-09 30-Jun-09 30-Sep-09
GAAP Operating
Expense (a) $81 $70 $58
Less: PCD Operating
Expense (b) - - -
Less: Korea Handset
Operating Expense (c) 3 2 1
--- --- ---
Non-GAAP Operating
Expense $78 $68 $57
=== === ===
(a) GAAP Operating Expense for each period is the consolidated operating
expense as reported on Form 10-Q or Form 10-K, as applicable, for such
period, except for the consolidated operating expense for the quarter
ended December 31, 2008, which is derived from the operating expenses
reported in the Form 10-Qs and Form 10-K with respect to the fiscal
year 2008.
(b) Effective July 1, 2008 the PCD segment was divested by the Company.
(c) Both prior to and after the July 1, 2008 divestiture of PCD, all
direct operating expense relating to Korea handset has been recorded
in the Handset segment.
UTSTARCOM, INC.
November 5, 2009 Conference Call
RECONCILIATION OF GAAP OPERATING LOSS
TO PRO FORMA NON-GAAP OPERATING LOSS
($ 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 ended Qtr ended Qtr ended Qtr ended Year ended
31-Mar-08 30-Jun-08 30-Sep-08 31-Dec-08 31-Dec-08
GAAP Operating
Loss (a) ($31) ($31) ($35) ($79) ($176)
Less: PCD Operating
Profit (b) 25 28 - - 53
Less: Korea Handset
Operating Income
(Loss) (c) (7) (10) (4) (9) (30)
--- --- --- --- ---
Non-GAAP Operating
Loss ($49) ($49) ($31) ($70) ($199)
=== === === === ===
Qtr ended Qtr ended Qtr ended
31-Mar-09 30-Jun-09 30-Sep-09
GAAP Operating
Loss (a) ($59) ($85) ($34)
Less: PCD Operating
Profit (b) - - -
Less: Korea Handset
Operating Income
(Loss) (c) - (30) 1
--- --- ---
Non-GAAP Operating Loss ($59) ($55) ($35)
=== === ===
(a) GAAP Operating Loss for each period is the consolidated operating
loss as reported on Form 10-Q or Form 10-K, as applicable, for such
period, except for the consolidated operating loss for the quarter
ended December 31, 2008, which is derived from the operating loss
reported in the Form 10-Qs and Form 10-K with respect to fiscal year
2008.
(b) Effective July 1, 2008 the PCD segment was divested by the Company.
(c) Both prior to and after the July 1, 2008 divestiture of PCD, the
operating loss relating to Korea handset has been recorded in the
Handset segment.
UTSTARCOM, INC.
November 5, 2009 Conference Call
ABBREVIATED PRO FORMA NON-GAAP P&L STATEMENT (a)
($ 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 ended Qtr ended Qtr ended Qtr ended Year ended
31-Mar-08 30-Jun-08 30-Sep-08 31-Dec-08 31-Dec-08
Non-GAAP Revenue $155 $184 $146 $149 $634
Non-GAAP Gross Profit 57 46 51 34 188
Non-GAAP Gross
Margin % 37% 25% 35% 23% 30%
Non-GAAP Operating
Expense 106 96 82 104 388
--- --- --- --- ---
Non-GAAP Operating
Loss ($49) ($49) ($31) ($70) ($199)
=== === === === ===
Qtr ended Qtr ended Qtr ended
31-Mar-09 30-Jun-09 30-Sep-09
Non-GAAP Revenue $80 $83 $63
Non-GAAP Gross Profit 19 12 22
Non-GAAP Gross
Margin % 24% 14% 35%
Non-GAAP Operating
Expense 78 68 57
--- --- ---
Non-GAAP Operating
Loss ($59) ($55) ($35)
=== === ===
(a) Please refer to the preceding reconciliation tables for the
adjustments to GAAP Revenue, Gross Profit, Operating Expense and
Operating Loss.
SOURCE UTStarcom, Inc.