UTStarcom (UTSI) 8-K Other events

Exhibit 99.1

UTStarcom, Inc.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

	Three months ended						Six months ended
	June 30, 2004			June 30, 2003 *			June 30, 2004			June 30, 2003 *
Net sales	$	689,628		$	405,834		$	1,311,919		$	736,354
Cost of sales	514,163			268,330			960,420			486,165
Gross profit	175,465			137,504			351,499			250,189
Operating expenses:
Selling, general and administrative	67,830			34,963			134,773			72,546
Research and development	52,592			36,078			98,250			62,890
In process research and development	1,400			9,328			1,400			10,648
Amortization of intangible assets	3,334			1,483			6,307			2,178
Total operating expenses	125,156			81,852			240,730			148,262
Operating income	50,309			55,652			110,769			101,927
Interest and other income (expenses)	4,962			(1,357		)	14,018			3,133
Equity in loss of affiliated companies	(1,201		)	(1,745		)	(2,198		)	(2,720		)
Income before income taxes and minority interest	54,070			52,550			122,589			102,340
Income tax expense	10,814			13,138			24,518			25,585
Minority interest in earnings (losses) of consolidated subsidiaries	(37		)	—			(87		)	—
Net income	$	43,219		$	39,412		$	97,984		$	76,755
Basic earnings per share	$	0.38		$	0.39		$	0.86		$	0.74
Diluted earnings per share	$	0.32		$	0.33		$	0.72		$	0.62
Weighted average shares used in per-share calculation:
• Basic	113,773			100,698			114,193			104,009
• Diluted	136,095			124,360			137,709			126,409

	Three months ended					Six months ended
	June 30, 2004			June 30, 2003 *		June 30, 2004			June 30, 2003 *
1. The above unaudited financial statements include the following non-cash expenses:
Cost of Sales	$	—		$	3	$	—		$	41
Selling, general and administrative	—			118		51			2,499
Research and development	168			594		194			2,660
Total stock compensation expense	$	168		$	715	$	245		$	5,200
Amortization of intangible assets	$	3,465		$	1,483	$	6,466		$	7,527
In-process research and development	$	1,400		$	1,320	$	1,400		$	4,720
Change in investment portfolio	$	(309	)	$	223	$	(501	)	$	3,376
2. Earnings per share
Basic earnings per share Income available to common stockholders	$	43,219		$	39,412	$	97,984		$	76,755
Effect of Dilutive Securities 7/8% Convertible Subordinated Notes	884			1,092		1,798			1,375
Diluted earnings per share Income available to common stockholders + assumed conversions	$	44,103		$	40,504	$	99,782		$	78,130

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

UTStarcom, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

	June 30, 2004			December 31, 2003
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	561,746		$	422,591
Accounts receivable, net	509,608			324,921
Related parties accounts receivable, net	29,884			43,944
Notes receivable	43,392			11,362
Inventories, net	435,473			257,038
Deferred costs/Inventories at customer sites under contracts	334,913			558,977
Prepaid expenses	117,995			136,262
Restricted cash and short term investments	42,633			24,404
Other current assets	39,147			52,408
Total current assets	2,114,791			1,831,907
Property, plant and equipment, net	226,009			186,076
Long-term investments	24,504			24,066
Goodwill and intangible assets, net	177,620			144,232
Other long term assets	47,735			40,677
Total assets	$	2,590,659		$	2,226,958
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	389,094		$	251,176
Income taxes payable	27,945			16,780
Customer advances	149,243			458,654
Deferred revenue	49,493			44,958
Other	205,137			173,139
Total current liabilities	820,912			944,707
Long-term debt	402,500			402,500
Minority interest in consolidated subsidiaries	647			560
Stockholders’ equity:
Common stock	143			131
Additional paid-in capital	1,114,632			653,624
Deferred stock compensation	(7,315		)	(7,761		)
Retained earnings	254,740			229,777
Other comprehensive income/(loss)	4,400			3,420
Total stockholders’ equity	1,366,600			879,191
Total liabilities and stockholders’ equity	$	2,590,659		$	2,226,958

	June 30, 2004		December 31, 2003
Inventories are made up of the following:
Inventories at factories	$	312,810	$	166,075
Inventories at customer sites	122,663		90,963
Inventories at customer sites under contracts	334,913		558,977
Total inventories	$	770,386	$	816,015

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