Investor Relations
UTStarcom Releases Financial Results for the First Quarter of 2010
May 4, 2010 (PR Newswire) --
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.