UTStarcom (UTSI) 8-K Consolidated Statements of Operations

Exhibit 99.1

UTStarcom, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

	Three months ended
	March 31, 2004			March 31, 2003 *
Net sales	$	622,292		$	330,520
Cost of sales	446,258			217,835
Gross profit	176,034			112,685
Operating expenses:
Selling, general and administrative	66,943			37,583
Research and development	45,658			26,812
In process research and development				1,320
Amortization of intangible assets	2,973			695
Total operating expenses	115,574			66,410
Operating income	60,460			46,275
Interest and other income	9,057			4,490
Equity in loss of affiliated companies	(997		)	(975		)
Income before income taxes and minority interest	68,520			49,790
Income tax expense	13,704			12,447
Minority interest in earnings of consolidated subsidiaries	(50		)	—
Net income	$	54,766		$	37,343
Basic earnings per share	$	0.48		$	0.35
Diluted earnings per share	$	0.40		$	0.33
Weighted average shares used in per-share calculation:
• Basic	114,614			107,358
• Diluted	139,325			111,953

	Three months ended
	March 31, 2004		March 31, 2003 *
1. The above unaudited financial statements include the following non-cash expenses:
Cost of Sales	$	—	$	3
Selling, general and administrative	51		118
Research and development	26		594
Total stock compensation expense	$	77	$	715
Amortization of intangible assets	$	2,973	$	695
In-process research and development	$	—	$	1,320
Impairment in investment portfolio	$	226	$	223
2. Earnings per share
Basic earnings per share
Income available to common stockholders	$	54,766	$	37,343
Effect of Dilutive Securities
7/8% Convertible Subordinated Notes	917		—
Diluted earnings per share
Income available to common stockholders + assumed conversions	$	55,683	$	37,343

*  Certain reclassifications have been made to prior year balances in order to conform to the current year presentation

UTStarcom, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

	March 31, 2004			December 31, 2003
	(unaudited)
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	766,269		$	422,591
Accounts receivable, net	432,474			368,865
Notes receivable	43,824			11,362
Inventories, net	318,079			257,038
Deferred costs/Inventories at customer sites under contracts	426,240			558,977
Prepaid expenses	114,669			136,262
Restricted cash and short term investments	30,864			24,404
Other current assets	54,628			52,408
Total current assets	2,187,047			1,831,907
Property, plant and equipment, net	200,762			186,076
Long-term investments	24,101			24,066
Goodwill and intangible assets, net	143,058			145,933
Other long term assets	40,836			38,976
Total assets	$	2,595,804		$	2,226,958
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	288,017			$	251,176
Income taxes payable	26,397			16,780
Customer advances	302,255			458,654
Deferred revenue	57,209			44,958
Other	175,857			173,139
Total current liabilities	849,735			944,707
Long-term debt	402,500			402,500
Other long-term liabilities
Minority interest in consolidated subsidiaries	610			560
Stockholders’ equity:
Common stock	144			131
Additional paid-in capital	1,115,113			653,624
Deferred stock compensation	(7,484		)	(7,761		)
Retained earnings	231,326			229,777
Receivable from shareholders				—
Other comprehensive income/(loss)	3,860			3,420
Total stockholders’ equity	1,342,959			879,191
Total liabilities and stockholders’ equity	$	2,595,804		$	2,226,958

	March 31, 2004		December 31, 2003
	(unaudited)
Inventories are made up of the following:
Inventories at factories	$	175,327	$	166,075
Inventories at customer sites	142,752		90,963
Inventories at customer sites under contracts	426,240		558,977
Total inventories	$	744,319	$	816,015

*  Certain reclassifications have been made to prior year balances in order to conform to the current year presentation