Investor Relations
UTStarcom Releases Third and Fourth Quarter and Full Year 2006 Financial Results
ALAMEDA, Calif., Oct. 10 /PRNewswire-FirstCall/ -- UTStarcom, Inc.
(Nasdaq: UTSI), a global leader in IP-based, end-to-end networking solutions
and services, today reported financial results for the third and fourth
quarters of 2006 and for the full year ended 2006. The Company also announced
the completion of the China sales investigation.
UTStarcom Releases Third and Fourth Quarter and Full Year 2006 Financial Results
Announces Completion of the China Sales Investigation
Provides Details of Restructuring Plan
(Logo: http://www.newscom.com/cgi-bin/prnh/20051013/SFTH063LOGO)
Net sales for the third quarter 2006 were
the third quarter 2006 were 12.4% and net loss for the quarter was
million
Net sales for the fourth quarter 2006 were
for the fourth quarter 2006 were 11.1% and net loss for the quarter was
million
Net sales for the full year 2006 were
full year 2006 were 15.7% and net loss for the year was
loss of (
Restructuring Plan
On
restructuring plan to reduce operating costs. The initial phase of this plan
includes a worldwide reduction of approximately 11% of the Company's
headcount, or approximately 700 employees. The workforce reduction will be
based primarily in the
international locations. Management expects the headcount reduction phase of
the restructuring plan will be completed in the fourth quarter of 2007. As
such, the Company expects to incur a restructuring charge in the fourth
quarter in connection with the headcount reduction of approximately
million
realize annual cost savings in salary and compensation-related expenses of
approximately
'The restructuring plan is closely aligned with our overall strategy of
becoming a more focused and operationally efficient company,' said
Blackmore
always difficult; however, they are essential as we strive to attain
consistent profitability and improve our cash flows. We have already started
to implement the plan and expect to achieve the full benefit by the first
quarter of 2008.'
Conference Call
The Company will conduct a conference call, which is open to the public,
to discuss these results. The call will take place today,
ID number is 19776282.
A replay of the call will be available for 30 days. The conference call
replay numbers are as follows:
706-645-9291. The Access Code is 19776282.
Investors will also have the opportunity to listen to the conference call
and the replay over the Internet through UTStarcom's Web site at:
http://www.utstar.com
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 broadband,
wireless, and handset 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 design operations in the
and
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 the foregoing
statements regarding the anticipated timing, scope, costs, benefits and other
operational impact of the Company's restructuring plan. These statements are
forward-looking in nature and subject to risks and uncertainties that may
cause actual results to differ materially. These risk factors include the
ability of the Company to capitalize on any cost-savings to improve the
operational performance of the Company, rapidly changing technology, the
changing nature of global telecommunications markets, the termination of
significant contracts, the direction and results of future research and
development efforts, evolving product and applications standards, reduction or
delays in system deployments, product transitions, changes in demand for and
acceptance of the Company's products, general adverse economic conditions, and
trends and uncertainties such as changes in government regulation and
licensing requirements. The Company also refers readers to the 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.
Company Contact
Chesha Kamieniecki
Director of Investor Relations
UTStarcom, Inc.
(510) 749-1560
UTStarcom, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
September 30, December 31,
ASSETS 2006 2005
Current assets: (Unaudited) (As restated)
Cash, cash equivalents and short-term
investments $616,740 $658,837
Accounts receivable, net 429,086 522,964
Notes receivable 8,532 2,065
Inventories 463,390 425,955
Deferred costs 209,230 239,876
Prepaids and other current assets 126,179 99,062
Short-term restricted cash and
investments 23,835 53,680
Total current assets 1,876,992 2,002,439
Property, plant and equipment, net 212,093 233,403
Long-term investments 44,954 26,023
Goodwill 3,063 3,063
Intangible assets, net 60,747 75,313
Long-term deferred costs 177,007 185,279
Other long-term assets 27,817 25,811
Total assets $2,402,673 $2,551,331
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $308,189 $320,677
Short-term debt 105,010 198,826
Income taxes payable 31,147 34,229
Customer advances 286,630 221,301
Deferred revenue 95,786 101,912
Other current liabilities 234,621 291,368
Total current liabilities 1,061,383 1,168,313
Long-term deferred revenue 255,714 273,131
Long-term debt 274,900 274,900
Other long-term liabilities 13,843 -
Total liabilities 1,605,840 1,716,344
Minority interest in consolidated subsidiaries 7,500 8,338
Stockholders' equity:
Common stock: $0.00125 par value;
authorized: 750,000,000 shares;
issued and outstanding: 121,284,976
and 121,018,036 at September 30,
2006 and December 31, 2005, respectively 152 152
Additional paid-in capital 1,202,072 1,192,201
Deferred stock-based compensation - (3,591)
Accumulated deficit (452,214) (376,899)
Accumulated other comprehensive income 39,323 14,786
Total stockholders' equity 789,333 826,649
Total liabilities, minority interest
and stockholders' equity $2,402,673 $2,551,331
UTStarcom, Inc.
Consolidated Statement of Operations
(in thousands, except per share amounts)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2006 2005 2006 2005
(As restated) (As restated)
Net sales $600,899 $597,435 $1,754,406 $2,190,018
Cost of net sales 526,098 559,548 1,446,864 1,816,837
Gross profit 74,801 37,887 307,542 373,181
Operating expenses:
Selling, general and
administrative 80,076 86,414 246,908 297,390
Research and development 46,305 60,817 139,310 192,297
Amortization of intangible
assets 4,821 6,643 14,567 20,391
Gain on sale of semiconductor
design assets (12,291) - (12,291) -
Impairment of long-lived
assets - 218,094 - 218,094
Restructuring - 3,378 - 18,505
In-process research and
development - - - 660
Total operating expenses 118,911 375,346 388,494 747,337
Operating loss (44,110) (337,459) (80,952) (374,156)
Interest income (expense), net 594 (2,203) 1,406 (8,390)
Gain on extinguishment of
subordinated notes - 20,297 - 31,392
Other income (expense), net 1,835 7,352 12,289 (1,723)
Loss before income taxes,
minority interest and equity
in loss of affiliated
companies (41,681) (312,013) (67,257) (352,877)
Income tax expense (1,459) (125,222) (8,966) (134,041)
Minority interest in losses
of consolidated subsidiaries 92 3 907 94
Equity in loss of affiliated
companies - (786) - (1,818)
Net loss $(43,048) $(438,018) $(75,316) $(488,642)
Loss per share - Basic and
diluted $(0.36) $(3.70) $(0.62) $(4.22)
Weighted average shares used
in per-share calculation:
-Basic and diluted 120,676 118,262 120,628 115,902
UTStarcom, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)
(Unaudited) Nine months ended September 30,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES: (As restated)
Net loss $(75,316) $(488,642)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 51,547 78,489
Gain on sale of semiconductor design
assets (12,291) -
Net loss on sale of assets 2,183 3,870
Loss on asset impairment - 218,094
Non-cash restructuring charges - 12,389
Stock-based compensation expense 13,143 191
(Recovery of) provision for doubtful
accounts (6,948) 38,115
(Recovery of) provision for deferred
costs reserves (5,103) 14,564
Deferred income taxes (671) 192,383
Gain on extinguishment of debt - (31,392)
Other (102) 3,164
Changes in operating assets and liabilities:
Accounts receivable 105,466 202,650
Inventories (35,659) 116,028
Deferred costs 51,324 (55,974)
Other assets (15,585) 84,956
Accounts payable (16,027) (120,472)
Income taxes payable (3,408) (118,615)
Customer advances 61,761 (164,814)
Deferred revenue (24,740) 93,138
Other current liabilities (71,452) 5,504
Net cash provided by operating activities 18,122 83,626
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (17,176) (60,904)
Investment in affiliates, net of cash
acquired (302) (3,550)
Purchase of business, net of cash
acquired - (24,326)
Proceeds from sale of semiconductor
design assets 19,965 -
Proceeds from disposal of property 136 695
Change in restricted cash and long-
term investments 26,536 176
Purchase of short-term investments (40,182) (149,469)
Proceeds from sale of short-term
investments 42,121 270,672
Other 1,538 (750)
Net cash provided by investing activities 32,636 32,544
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of stock, net of expenses 319 4,327
Proceeds from borrowing 63,259 346,284
Payments on borrowings (159,251) (478,081)
Cash paid to extinguish debt - (57,136)
Other (683) 1,801
Net cash used in financing activities (96,356) (182,805)
Effect of exchange rate changes on
cash and cash equivalents 4,437 229
Net decrease in cash and cash equivalents (41,161) (66,406)
Cash and cash equivalents at
beginning of period 645,571 562,532
Cash and cash equivalents at end of
period $604,410 $496,126
Supplemental disclosure of cash flow
information:
Cash paid:
Interest $8,542 $11,294
Income taxes $7,839 $10,872
Non-cash operating activity
Accounts receivable transferred to
notes receivable $19,023 $40,210
Property, plant and equipment
exchanged for long-term investment $5,550 $ -
UTStarcom, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
December 31,
ASSETS 2006 2005
Current assets: (As restated)
Cash, cash equivalents and short-term
investments $671,169 $658,837
Accounts receivable, net 406,080 522,964
Notes receivable 5,060 2,065
Inventories 440,445 425,955
Deferred costs 195,393 239,876
Prepaids and other current assets 101,795 99,062
Short-term restricted cash and investments 16,666 53,680
Total current assets 1,836,608 2,002,439
Property, plant and equipment, net 213,155 233,403
Long-term investments 47,809 26,023
Goodwill 3,063 3,063
Intangible assets, net 56,443 75,313
Long-term deferred costs 176,649 185,279
Other long-term assets 40,223 25,811
Total assets $2,373,950 $2,551,331
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $304,869 $320,677
Short-term debt 102,758 198,826
Income taxes payable 2,483 34,229
Customer advances 265,812 221,301
Deferred revenue 95,742 101,912
Other current liabilities 271,400 291,368
Total current liabilities 1,043,064 1,168,313
Long-term deferred revenue 261,014 273,131
Long-term debt 275,161 274,900
Other long-term liabilities 13,858 -
Total liabilities 1,593,097 1,716,344
Minority interest in consolidated subsidiaries
Stockholders' equity: 6,493 8,338
Common stock: $0.00125 par value;
750,000,000 authorized shares;
121,299,113 issued and 121,294,645
outstanding at December 31, 2006;
121,018,036 issued and outstanding
at December 31, 2005 152 152
Additional paid-in capital 1,205,553 1,192,201
Deferred stock compensation - (3,591)
Accumulated deficit (494,244) (376,899)
Accumulated other comprehensive income 62,899 14,786
Total stockholders' equity 774,360 826,649
Total liabilities, minority interest
and stockholders' equity $2,373,950 $2,551,331
UTStarcom, Inc.
Consolidated Statement of Operations
(in thousands, except per share amounts)
Three months ended December 31, Year ended
2006 2005 2006
(Unaudited)
(As restated)
Net sales $704,456 $681,092 $2,458,861
Cost of net sales 626,253 618,437 2,073,117
Operating expenses (income): 78,203 62,655 385,744
Selling, general and
administrative 87,547 74,073 334,455
Research and development 43,559 54,515 182,869
Amortization of intangible
assets 4,304 5,462 18,871
Gain on sale of semiconductor
design assets - - (12,291)
Impairment of long-lived assets - 11,164 -
Restructuring - - -
In-process research and
development - - -
Total net operating expenses 135,410 145,214 523,904
Operating (loss) income (57,207) (82,559) (138,160)
Interest income (expense), net 1,734 (1,283) 3,141
Gain on extinguishment of
subordinated notes - - -
Other income, net (11,198) 45,388 1,092
(Loss) income before income
taxes, minority interest and
equity in loss of affiliated
companies (66,671) (38,454) (133,927)
Income tax benefit (expense) 23,991 (2,501) 15,024
Minority interest in losses of
consolidated subsidiaries 651 598 1,558
Equity in loss of affiliated
companies - (3,645) -
Net (loss) income $(42,029) $(44,002) $(117,345)
(Loss) earnings per share -
Basic and diluted $(0.35) $(0.37) $(0.97)
Weighted average shares used
in per-share calculation: 120,676 120,391 120,657
- Basic and diluted
UTStarcom, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)
Year ended December 31,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES: (As restated)
Net (loss) income $(117,345) $(532,645)
Adjustments to reconcile net (loss)
income to net cash provided by (used in)
operating activities:
Depreciation and amortization 68,039 98,550
Gain on sale of semiconductor design assets (12,291) -
Net loss on sale of assets 2,715 2,559
Impairment of long-lived assets - 218,094
Impairment of long-term investments 13,500 -
Stock-based compensation expense 16,592 863
Non-cash settlement of restructuring charges - 17,250
In-process research and development - 660
Gain on sale of investment - (46,576)
Provision (recovery) for doubtful accounts (9,347) 18,210
Provision for deferred costs 2,730 12,868
Gain on extinguishment of
subordinated notes - (31,392)
Deferred income taxes (1,223) 190,658
Other (36) 15,897
Changes in operating assets and liabilities: - -
Accounts receivable 133,052 268,167
Inventories (5,571) 165,923
Deferred costs 52,478 (49,376)
Other assets (7,490) 95,802
Accounts payable (22,296) (87,811)
Income taxes payable (28,946) (110,209)
Customer advances 38,423 (150,313)
Deferred revenue (29,328) 80,676
Other current liabilities (27,577) 40,528
Net cash provided by (used in)
operating activities 66,079 218,383
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (26,274) (64,396)
Proceeds from sale of semiconductor design assets 35,965 -
Proceeds from disposition of investment interest 775 -
Investment in affiliates (302) (3,550)
Purchase of businesses, net of cash acquired - (24,326)
Purchase of intangible assets (658) (750)
Change in restricted cash and
long-term investments 20,882 (18,418)
Purchase of short-term investments (42,400) (165,284)
Proceeds from sale of short-term investments 46,428 346,966
Other 1,649 (105)
Net cash provided by (used in)
investing activities 36,065 70,137
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of stock, net of expenses 390 6,952
Proceeds from borrowings 100,629 436,678
Payments on borrowings (200,742) (653,123)
Repurchase of stock (39) -
Proceeds from equity offering - -
Other 253 6,689
Net cash provided by (used in)
financing activities (99,509) (202,804)
Effect of exchange rate changes on
cash and cash equivalents 13,417 (2,677)
Net increase in cash and cash equivalents 16,052 83,039
Cash and cash equivalents at beginning of year 645,571 562,532
Cash and cash equivalents at end of year $661,623 $645,571
Supplemental disclosure of cash flow information:
Cash paid:
Interest $9,773 $14,197
Income taxes $13,574 $11,265
Non-cash operating activities
Accounts receivable transferred to
notes receivable $22,921 $55,065
Property, plant and equipment
exchanged for long-term investment $5,500 $ -
Non-cash financing activities
Common stock issued in conjunction
with debt extinguishment $ - $37,568
SOURCE UTStarcom, Inc.