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