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								Nine months ended
	September 30, 2004				September 30, 2003 *				September 30, 2004				September 30, 2003 *
Net sales	$	645,016			$	584,382			$	1,956,935			$	1,320,736
Cost of sales	507,882				398,280				1,467,496				884,445
Gross profit	137,134				186,102				489,439				436,291
Operating expenses:
Selling, general and administrative	74,916				57,371				209,689				129,917
Research and development	56,026				44,723				154,276				107,613
In process research and development	—				161				1,400				10,809
Amortization of intangible assets	3,639				3,081				9,946				5,259
Total operating expenses	134,581				105,336				375,311				253,598
Operating income	2,553				80,766				114,128				182,693
Interest and other income (expenses)	1,295				(306			)	15,313				2,827
Equity in loss of affiliated companies	(727			)	(1,560			)	(2,925			)	(4,280		)
Income before income taxes and minority interest	3,121				78,900				126,516				181,240
Income tax expense (income)	(1,906			)	19,725				22,773				45,310
Minority interest in earnings of consolidated subsidiaries	(40			)	(35			)	(127			)	(35		)
Net income	$		4,987		$	59,140			$		103,616		$	135,895
Basic earnings per share	$		0.04		$	0.58			$		0.91		$	1.31
Diluted earnings per share	$		0.04		$		0.46		$		0.78		$	1.12
Diluted earnings per “If Converted” share	$		0.04		N/A				N/A				N/A
Weighted average shares used in per-share calculation:
• Basic	113,945				102,814				114,110				103,607
• Diluted	116,307				131,914				136,210				123,194
• Diluted “If Converted” Shares	133,226				N/A				N/A				N/A
	Three months ended								Nine months ended
	September 30, 2004				September 30, 2003 *				September 30, 2004				September 30, 2003 *
1. The above unaudited financial statements include the following non-cash expenses:
Cost of Sales	$		—		$		2		$		—		$	7
Selling, general and administrative	—				39				51				225
Research and development	83				121				277				3,005
Total stock compensation expense	$		83		$		162		$		328		$	3,237
Amortization of intangible assets	$		4,102		$		3,081		$		10,569		$	5,259
In-process research and development	$		—		$		161		$		1,400		$	10,809
Change in investment portfolio	$		1,061		$		157		$		1,562		$	380
2. Earnings per share
Basic earnings per share Income available to common stockholders	$		4,987		$		59,140		$		103,616		$	135,895
Effect of Dilutive Securities 7/8% Convertible Subordinated Notes	816				1,098				2,663				2,473
Diluted earnings per share Income available to common stockholders + assumed conversions	$		5,803		$		60,238		$		106,279		$	138,368

*  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)

	September 30, 2004			December 31, 2003*
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	796,203		$	422,591
Accounts receivable, net	691,160			324,921
Related parties accounts receivable, net	46,339			43,944
Notes receivable	24,877			11,362
Inventories, net	439,412			257,038
Deferred costs/Inventories at customer sites under contracts	168,903			558,977
Prepaid expenses	79,849			136,262
Restricted cash and short term investments	36,799			24,404
Other current assets	41,313			52,408
Total current assets	2,324,855			1,831,907
Property, plant and equipment, net	255,029			186,076
Long-term investments	25,428			24,066
Goodwill and intangible assets, net	174,087			144,232
Other long term assets	53,427			40,677
Total assets	$	2,832,826		$	2,226,958
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and short term debt	$	513,010		$	251,176
Income taxes payable	16,783			16,780
Customer advances	279,631			458,654
Deferred revenue	57,874			44,958
Other	191,606			173,139
Total current liabilities	1,058,904			944,707
Long-term debt	402,500			402,500
Minority interest in consolidated subsidiaries	687			560
Stockholders’ equity:
Common stock	143			131
Additional paid-in capital	1,115,433			653,624
Deferred stock compensation	(7,233		)	(7,761		)
Retained earnings	260,371			229,777
Other comprehensive income	2,021			3,420
Total stockholders’ equity	1,370,735			879,191
Total liabilities and stockholders’ equity	$	2,832,826		$	2,226,958
	September 30, 2004			December 31, 2003*
Inventories and deferred costs are made up of the following:
Inventories at factories	$	324,244		$	166,075
Inventories at customer sites	115,168			90,963
Inventories at customer sites under contracts	168,903			558,977
Total inventories and deferred costs	$	608,315		$	816,015

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