Exhibit 99.1
UTSTARCOM RELEASES FINANCIAL RESULTS FOR THE FIRST QUARTER OF 2008
First Quarter 2008 Revenues of $586 Million
ALAMEDA, Calif., — May 15, 2008 — UTStarcom, Inc. (Nasdaq: UTSI), a global leader in IP-based, end-to-end networking solutions and services, today reported financial results for the first quarter of 2008.
Net sales for the first quarter of 2008 were $586 million as compared to $476 million in the first quarter of 2007, due to growth in the Personal Communications Division. Gross margins for the first quarter of 2008 were 15.7% as compared to 15.8% in the first quarter of 2007. The operating loss for the first quarter of 2008 was $30.9 million as compared to an operating loss of $52.3 million in the first quarter of 2007. Net income for the first quarter of 2008 was $25.4 million, or $0.21 per share, as compared to a net loss of $54.0 million, or ($0.45) per share in the first quarter of 2007.
The significant items in the first quarter 2008 net income include:
· A gain on sale of investments of $48.3 million including Gemdale and Infinera
· A net $8.5 million tax benefit in China primarily due to a change in withholding tax laws
Cash, cash equivalents and short term investments was $305 million at quarter end, while the total debt was $36 million after paying off $290 million of convertible notes and accrued interest during the quarter.
“During the first quarter we made progress in moving the company forward in terms of both financial and operational results. Our core areas of Multimedia Communications and Broadband continued to win new business in key markets while the Personal Communications Division’s results benefited from the introduction of new high end products.” Peter Blackmore, UTStarcom’s president and chief operating officer, went on to say, “while we are encouraged by this quarter’s developments, we recognize that this is only a step along our
turnaround path and we will continue to push for improvements throughout the company’s activities.”
Q2 2008 Guidance
· Revenue is expected to be in the range of $580 - $610 million which would represent a growth of 8% - 13% above the same period last year
· Overall gross margins in the second quarter is expected to be approximately 14% depending upon the mix of business between our core and Personal Communications business segments
· Operating expenses are expected to range between $118-$123 million including the cost of certain external professional services
Conference Call
The company will host a conference call to discuss the results. The call will take place at 2:00 p.m. (PDT) / 5:00 p.m. (EDT) on May 15, 2008. The conference call dial-in numbers are as follows: United States — 888-398-3046; International — 706-902-1962. The conference ID number is 47434965.
A replay of the call will be available for 30 days. The conference call replay numbers are as follows: United States — 800-642-1687; International — 706-645-9291. The Access Code is 47434965.
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.
About UTStarcom, Inc.
UTStarcom is a global leader in IP-based, end-to-end networking solutions and international service and support. The company develops, manufactures and markets its broadband, wireless, and terminal solutions to network operators in both emerging and established telecommunications markets worldwide. 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. UTStarcom was founded in 1991 and is headquartered in Alameda, California. The company has research and development centers in the USA, Canada, China, Korea and India.
For more information about UTStarcom, please visit the UTStarcom Web site at www.utstar.com.
Forward-Looking Statements
This release includes forward-looking statements, including the foregoing statements regarding the company’s guidance for the second quarter of 2008, including anticipated revenue, gross margins, operating expenses and cash flow from operations and anticipated realization of operational improvements, 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 and execute on its liquidity plans 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.
# # #
Company Contact
Barry Hutton
Senior Director, Investor Relations
UTStarcom, Inc.
(510) 769-2807
barry.hutton@utstar.com
UTStarcom, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
|
| March 31, |
| December 31, |
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| 2008 |
| 2007 |
| ||
ASSETS |
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Current assets: |
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Cash, cash equivalents and short-term investments |
| $ | 305,119 |
| $ | 503,078 |
|
Accounts and notes receivable, net |
| 269,701 |
| 343,525 |
| ||
Inventories and deferred costs |
| 521,794 |
| 524,727 |
| ||
Prepaids and other current assets |
| 156,600 |
| 121,636 |
| ||
Total current assets |
| 1,253,214 |
| 1,492,966 |
| ||
Long-term assets: |
|
|
|
|
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Property, plant and equipment, net |
| 210,336 |
| 209,094 |
| ||
Long-term deferred costs |
| 164,922 |
| 164,766 |
| ||
Other long-term assets |
| 121,181 |
| 117,762 |
| ||
Total assets |
| $ | 1,749,653 |
| $ | 1,984,588 |
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LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
| $ | 214,263 |
| $ | 148,440 |
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Short-term debt |
| 35,907 |
| 322,829 |
| ||
Customer advances |
| 244,947 |
| 229,050 |
| ||
Deferred revenue |
| 108,068 |
| 100,502 |
| ||
Other current liabilities |
| 274,688 |
| 302,395 |
| ||
Total current liabilities |
| 877,873 |
| 1,103,216 |
| ||
Long-term liabilities: |
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Long-term debt |
| 267 |
| 333 |
| ||
Long-term deferred revenue and other liabilities |
| 254,486 |
| 259,358 |
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Total liabilities |
| 1,132,626 |
| 1,362,907 |
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Minority interest in consolidated subsidiaries |
| 806 |
| 3,705 |
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Total stockholders’ equity |
| 616,221 |
| 617,976 |
| ||
Total liabilities, minority interest and stockholders’ equity |
| $ | 1,749,653 |
| $ | 1,984,588 |
|
UTStarcom, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
|
| Three months ended March 31 |
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| 2008 |
| 2007 |
| ||
|
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|
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Net sales |
| $ | 585,989 |
| $ | 475,902 |
|
Cost of net sales |
| 493,910 |
| 400,617 |
| ||
Gross profit |
| 92,079 |
| 75,285 |
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Operating expenses: |
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Selling, general and administrative |
| 79,744 |
| 79,837 |
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Research and development |
| 41,400 |
| 43,662 |
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Amortization of intangible assets |
| 1,824 |
| 4,046 |
| ||
Total operating expenses |
| 122,968 |
| 127,545 |
| ||
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|
|
|
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Operating loss |
| (30,889 | ) | (52,260 | ) | ||
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Interest expense, net |
| (3,254 | ) | (1,815 | ) | ||
Other income, net |
| 53,970 |
| 3,970 |
| ||
Income (loss) before income taxes and minority interest |
| 19,827 |
| (50,105 | ) | ||
Income taxes |
| 5,020 |
| (4,341 | ) | ||
Minority interest in losses of consolidated subsidiaries |
| 510 |
| 464 |
| ||
Net income (loss) |
| $ | 25,357 |
| $ | (53,982 | ) |
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Income (loss) per share - Basic |
| $ | 0.21 |
| $ | (0.45 | ) |
Income (loss) per share - Diluted |
| $ | 0.21 |
| $ | (0.45 | ) |
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Weighted average shares used in per share calculation: |
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- Basic |
| 122,096 |
| 120,900 |
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- Diluted |
| 123,098 |
| 120,900 |
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UTStarcom, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
|
| Three months ended March 31, |
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| 2008 |
| 2007 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income (loss) |
| $ | 25,357 |
| $ | (53,982 | ) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
| 10,112 |
| 14,744 |
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Gain on sale of investments and liquidation of ownership interest in a variable interest entity |
| (47,848 | ) | — |
| ||
Net loss (gain) on sale of fixed assets |
| 8 |
| (2,699 | ) | ||
Stock-based compensation expense |
| 4,795 |
| 2,755 |
| ||
Recovery of doubtful accounts |
| (680 | ) | (5,281 | ) | ||
Provision for (recovery of) deferred costs reserves |
| 320 |
| (1,504 | ) | ||
Deferred income taxes |
| (11,708 | ) | — |
| ||
Other |
| (343 | ) | 266 |
| ||
Changes in operating assets and liabilities: |
|
|
|
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Accounts receivable |
| 75,177 |
| 60,296 |
| ||
Inventories |
| 7,650 |
| (2,422 | ) | ||
Deferred costs |
| 8,028 |
| (5,222 | ) | ||
Other assets |
| (19,588 | ) | (31,433 | ) | ||
Accounts payable |
| 64,287 |
| (41,324 | ) | ||
Income taxes payable |
| 1,414 |
| 5,969 |
| ||
Customer advances |
| 19,902 |
| 44,298 |
| ||
Deferred revenue |
| (5,771 | ) | (11,790 | ) | ||
Other current liabilities |
| (34,404 | ) | (79,336 | ) | ||
Net cash provided by (used in) operating activities |
| 96,708 |
| (106,665 | ) | ||
CASH FLOWS FROM INVESTING ACTIVITIES: |
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Additions to property, plant and equipment |
| (7,630 | ) | (5,221 | ) | ||
Proceeds from the disposition of (purchase of) an investment interest |
| (1,949 | ) | 1,800 |
| ||
Proceeds from repayment of loan by a variable interest entity |
| 7,728 |
| — |
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Change in restricted cash |
| (4,517 | ) | 10,365 |
| ||
Purchase of short-term investments |
| (6,578 | ) | (15,576 | ) | ||
Proceeds from sale of short-term investments |
| 58,740 |
| 10,483 |
| ||
Other |
| 96 |
| (70 | ) | ||
Net cash provided by investing activities |
| 45,890 |
| 1,781 |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from borrowings |
| — |
| 64,621 |
| ||
Payments on borrowings |
| (288,861 | ) | (64,676 | ) | ||
Other |
| 2,473 |
| (654 | ) | ||
Net cash used in financing activities |
| (286,388 | ) | (709 | ) | ||
Effect of exchange rate changes on cash and cash equivalents |
| 4,823 |
| 2,120 |
| ||
Net decrease in cash and cash equivalents |
| (138,967 | ) | (103,473 | ) | ||
Cash and cash equivalents at beginning of period |
| 437,449 |
| 661,623 |
| ||
Cash and cash equivalents at end of period |
| $ | 298,482 |
| $ | 558,150 |
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