Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2017shares | |
Document and Entity Information | |
Entity Registrant Name | UTSTARCOM HOLDINGS CORP. |
Entity Central Index Key | 1,030,471 |
Document Type | 20-F |
Document Period End Date | Dec. 31, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 35,506,366 |
Document Fiscal Year Focus | 2,017 |
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 79,749 | $ 83,922 |
Short-term investments | 3,143 | 479 |
Accounts receivable, net of allowances for doubtful accounts of $2,437 and $2,339, respectively | 16,911 | 18,329 |
Inventories | 17,139 | 22,577 |
Deferred costs | 23,545 | 19,319 |
Prepaid and other current assets | 14,227 | 6,995 |
Short-term restricted cash | 12,099 | 11,397 |
Total current assets | 166,813 | 163,018 |
Property, plant and equipment, net | 1,714 | 1,610 |
Long-term investments | 5,856 | 7,753 |
Long-term deferred costs | 277 | 276 |
Long-term deferred tax assets | 3,012 | 2,049 |
Long-term restricted cash | 8,839 | 3,321 |
Other long-term assets | 533 | 676 |
Total assets | 187,044 | 178,703 |
Current liabilities: | ||
Accounts payable | 27,452 | 22,480 |
Income taxes payable | 7,952 | 8,140 |
Customer advances | 21,828 | 29,046 |
Deferred revenue | 7,286 | 10,779 |
Other current liabilities | 23,746 | 16,723 |
Total current liabilities | 88,264 | 87,168 |
Long-term deferred revenue | 4,135 | 3,813 |
Other long-term liabilities | 3,653 | 4,981 |
Total liabilities | 96,052 | 95,962 |
Commitments and contingencies (Note 7) | ||
Shareholders' equity: | ||
Ordinary shares: $0.00375 par value; 250,000 authorized shares; 39,363 and 39,009 shares issued at December 31, 2017 and December 31, 2016, respectively; 35,506 and 35,225 shares outstanding at December 31, 2017 and December 31, 2016, respectively | 122 | 122 |
Additional paid-in capital | 1,263,006 | 1,262,005 |
Treasury stock, at cost: 3,857 and 3,784 shares at December 31, 2017 and December 31, 2016, respectively | (8,374) | (8,234) |
Accumulated deficit | (1,226,173) | (1,233,154) |
Accumulated other comprehensive income | 62,411 | 62,002 |
Shareholders' equity | 90,992 | 82,741 |
Total liabilities and equity | $ 187,044 | $ 178,703 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CONSOLIDATED BALANCE SHEETS | ||
Allowances for doubtful accounts (in dollars) | $ 2,437 | $ 2,339 |
Ordinary share, par value (in dollars per share) | $ 0.00375 | $ 0.00375 |
Ordinary share, authorized shares | 250,000 | 250,000 |
Ordinary share, shares issued | 39,363 | 39,009 |
Ordinary share, shares outstanding | 35,506 | 35,225 |
Treasury shares | 3,857 | 3,784 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net sales | |||
Products | $ 77,283 | $ 61,735 | $ 87,361 |
Services | 21,009 | 24,777 | 29,742 |
Total net sales | 98,292 | 86,512 | 117,103 |
Cost of net sales | |||
Products | 50,636 | 41,472 | 65,891 |
Services | 14,510 | 16,684 | 23,344 |
Total cost of net sales | 65,146 | 58,156 | 89,235 |
Gross profit | 33,146 | 28,356 | 27,868 |
Operating expenses: | |||
Selling, general and administrative | 16,777 | 18,146 | 21,515 |
Research and development | 9,853 | 8,502 | 11,342 |
Total operating expenses | 26,630 | 26,648 | 32,857 |
Operating income (loss) | 6,516 | 1,708 | (4,989) |
Interest income | 1,177 | 871 | 557 |
Interest expense | (48) | (55) | (76) |
Other income, net | 2,976 | 2,748 | 3,489 |
Equity income (loss) of associates | (687) | 984 | (13,954) |
Investment impairment | (1,690) | (5,336) | (16,347) |
Income (loss) before income taxes | 8,244 | 920 | (31,320) |
Income tax benefit (expense) | (1,263) | (788) | 4,162 |
Net income (loss) | 6,981 | 132 | (27,158) |
Net loss attributable to non-controlling interests | 158 | ||
Net income (loss) attributable to UTStarcom Holdings Corp. | $ 6,981 | $ 290 | $ (27,158) |
Net income (loss) per share attributable to UTStarcom Holdings Corp. - Basic | $ 0.20 | $ 0.01 | $ (0.74) |
Net income (loss) per share attributable to UTStarcom Holdings Corp.-Diluted | $ 0.19 | $ 0.01 | $ (0.74) |
Weighted average shares outstanding-Basic | 35,467 | 35,806 | 37,003 |
Weighted average shares outstanding-Diluted | 36,176 | 36,402 | 37,003 |
Net income (loss) | $ 6,981 | $ 132 | $ (27,158) |
Other comprehensive income (loss), net of tax | |||
Net change in cumulative translation adjustment | 409 | 532 | (1,611) |
Gain on available-for-sale investments | (673) | ||
Comprehensive income (loss) | 7,390 | 664 | (29,442) |
Comprehensive loss attributable to non-controlling interests | 158 | ||
Comprehensive income (loss) attributable to UTStarcom Holdings Corp. | $ 7,390 | $ 822 | $ (29,442) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Treasury Stock | (Accumulated Deficit) | Accumulated Other Comprehensive Income | Non-controlling interest | Total |
Balance at Dec. 31, 2014 | $ 122 | $ 1,258,182 | $ (443) | $ (1,206,286) | $ 63,754 | $ 0 | $ 115,329 |
Balance (in shares) at Dec. 31, 2014 | 38,148,076 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Common stock issued upon option exercises | $ 0 | 39 | 39 | ||||
Common stock issued (in shares) | 11,543 | ||||||
Repurchase of ordinary shares | (3,695) | (3,695) | |||||
Repurchase of ordinary shares (in shares) | (1,563,302) | ||||||
Restricted stock issued and restricted stock units released | 0 | ||||||
Restricted stock issued and restricted stock units released (in shares) | 138,997 | ||||||
Stock-based compensation | 1,546 | 1,546 | |||||
Treasury stock retirement | 0 | ||||||
Net income (loss) | (27,158) | (27,158) | |||||
Other comprehensive income: | |||||||
Foreign currency translation | (1,611) | (1,611) | |||||
Realized loss from available-for-sale investments | (673) | (673) | |||||
Balance at Dec. 31, 2015 | $ 122 | 1,259,767 | (4,138) | (1,233,444) | 61,470 | 0 | 83,777 |
Balance (in shares) at Dec. 31, 2015 | 36,735,314 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Repurchase of ordinary shares | (4,096) | (4,096) | |||||
Repurchase of ordinary shares (in shares) | (2,054,655) | ||||||
Restricted stock issued and restricted stock units released | 0 | ||||||
Restricted stock issued and restricted stock units released (in shares) | 543,894 | ||||||
Stock-based compensation | 2,238 | 2,238 | |||||
Net income (loss) | 290 | (158) | 132 | ||||
Acquisition of non-controlling interests | 158 | 158 | |||||
Other comprehensive income: | |||||||
Foreign currency translation | 570 | 570 | |||||
Recognition due to closure of the subsidiaries | (38) | (38) | |||||
Balance at Dec. 31, 2016 | $ 122 | 1,262,005 | (8,234) | (1,233,154) | 62,002 | $ 0 | $ 82,741 |
Balance (in shares) at Dec. 31, 2016 | 35,224,553 | 35,225,000 | |||||
Increase (Decrease) in Stockholders' Equity | |||||||
Common stock issued upon option exercises | $ 0 | 135 | $ 135 | ||||
Common stock issued upon option exercises (in shares) | 51,666 | ||||||
Repurchase of ordinary shares | (140) | (140) | |||||
Repurchase of ordinary shares (in shares) | (72,739) | ||||||
Restricted stock issued and restricted stock units released | 866 | 866 | |||||
Restricted stock issued and restricted stock units released (in shares) | 302,886 | ||||||
Net income (loss) | 6,981 | 6,981 | |||||
Other comprehensive income: | |||||||
Foreign currency translation | 2,112 | 2,112 | |||||
Recognition due to closure of the subsidiaries | (1,703) | (1,703) | |||||
Balance at Dec. 31, 2017 | $ 122 | $ 1,263,006 | $ (8,374) | $ (1,226,173) | $ 62,411 | $ 90,992 | |
Balance (in shares) at Dec. 31, 2017 | 35,506,366 | 35,506,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) | $ 6,981 | $ 132 | $ (27,158) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Depreciation | 628 | 1,208 | 2,202 |
Net loss (gain) on disposal of assets | (62) | 180 | |
Gain on cumulative translation adjustment recognition from liquidation of subsidiaries | (1,703) | (38) | |
Gain on release of tax liability due to expiration of statute of limitations | (1,409) | (3,272) | (7,747) |
Equity loss (gain) of associates | 687 | (984) | 13,954 |
Investment impairment | 1,690 | 5,336 | 16,347 |
Gain on sale of short- term investment | (83) | (1,529) | |
Stock-based compensation expense | 866 | 2,238 | 1,546 |
Provision for doubtful accounts receivable | 4 | 1,564 | 79 |
Loan recovery, net | (538) | ||
Deferred income taxes | (1,092) | 771 | 1,030 |
Changes in operating assets and liabilities | |||
Accounts receivable | 1,413 | (1,966) | (1,491) |
Inventories and deferred costs | 1,212 | (190) | 35,973 |
Prepaids and other assets | (7,280) | 2,821 | 1,558 |
Accounts payable | 5,183 | 7,393 | (12,233) |
Income taxes payable | (26) | (751) | 3,369 |
Customer advances | (7,218) | (1,054) | (17,352) |
Deferred revenue | (3,172) | (10,556) | (18,610) |
Other liabilities | 7,074 | 3,225 | (1,216) |
Net cash provided by (used in) operating activities | 3,838 | 5,732 | (11,636) |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Additions to property, plant and equipment | (732) | (1,527) | (917) |
Net proceeds from sales of property, plant and equipment | 85 | ||
Change in restricted cash | (6,219) | 1,322 | 707 |
Purchase of short-term investments | (3,164) | ||
Purchase of investments | (481) | (300) | (1,670) |
Proceeds from sale of investments | 500 | 7,683 | 16,228 |
Proceeds from sale of short-term investments | 3,076 | ||
Net cash provided by (used in) investing activities | (10,096) | 7,263 | 17,424 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from exercise of stock options | 113 | 39 | |
Acquisition of non-controlling interests | (304) | ||
Repurchase of ordinary shares | (140) | (4,096) | (3,695) |
Net cash used in financing activities | (27) | (4,400) | (3,656) |
Effect of exchange rate changes on cash and cash equivalents | 2,112 | (1,723) | (2,906) |
Net increase (decrease) in cash and cash equivalents | (4,173) | 6,872 | (774) |
Cash and cash equivalents at beginning of year | 83,922 | 77,050 | |
Cash and cash equivalents at end of year | 79,749 | 83,922 | 77,050 |
Cash paid (Recovered): | |||
Interest | 47 | 55 | 76 |
Income taxes | $ 2,012 | $ 3,311 | $ (363) |
BASIS OF PRESENTATION, LIQUIDIT
BASIS OF PRESENTATION, LIQUIDITY | 12 Months Ended |
Dec. 31, 2017 | |
BASIS OF PRESENTATION, LIQUIDITY | |
BASIS OF PRESENTATION, LIQUIDITY | NOTE 1-BASIS OF PRESENTATION, LIQUIDITY UTStarcom Holdings Corp., and its wholly owned subsidiaries (collectively, the “Company”), a Cayman Islands corporation incorporated in 2011, is a global telecom infrastructure provider dedicated to developing technology that will serve the rapidly growing demand for bandwidth from mobile, streaming and other applications. The Company works with carriers from Asia to the Americas, to meet this demand through a range of innovative broadband packet optical transport and wireless/fixed-line access products and solutions. UTStarcom Inc. was founded in 1991 and started trading on NASDAQ in 2000. On June 24, 2011, the stockholders of UTStarcom Inc. approved the proposed merger (“the Merger”), to reorganize UTStarcom, Inc. as a Cayman Islands company. Pursuant to the approval of the shareholders, UTSI Mergeco Inc., a Delaware corporation and a wholly-owned subsidiary of UTStarcom Holdings Corp., merged with and into the existing public company, UTStarcom, Inc., which is incorporated under the laws of the State of Delaware. As a result of the reorganization, UTStarcom Holdings Corp. became the parent company of UTStarcom, Inc. and its subsidiaries. Also pursuant to the Merger, the Company issued an equal number of ordinary shares in exchange for the common stock of UTStarcom, Inc. The Company’s business is conducted in substantially the same manner as was conducted by UTStarcom, Inc. The transaction was accounted for as a legal re-organization of entities under common control. The accompanying consolidated financial statements include the accounts of the Company and its wholly- and majority-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the preparation of the consolidated financial statements. The non-controlling interests in consolidated subsidiaries are shown separately in the consolidated financial statements. The accompanying Consolidated Balance Sheets as of December 31, 2017 and 2016, and the Consolidated Statements of Operations and Comprehensive Income (Loss) for each of the three years ended December 31, 2017, 2016 and 2015 have been prepared by the Company pursuant to the rules and regulations of the U.S Securities and Exchanges Commission (“SEC”) and in conformity with generally accepted accounting principles in the United States (“US GAAP”). The accompanying consolidated financial statements are presented on the basis that the Company is a going concern. The going concern assumption contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and considers the Company’s current financial status, business operation, market strategy, and products development in the twelve months following the issuance date of these financial statements. The Company has concluded there was no substantial doubt about the Company’s ability to continue as a going concern. The Company earned net income of $7.0 million, net income of $0.3 million and incurred net losses of $27.2 million during the years ended December 31, 2017, 2016, and 2015, respectively. As of December 31, 2017 and 2016, the Company had an accumulated deficit of $1,226.2 million and $1,233.2 million, respectively. The Company generated net cash inflow from operation of $3.8 million and $5.7 million, and had a net cash outflows from operations of $11.6 million during the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017 and 2016, the Company had cash and cash equivalents of $79.7 million and $83.9 million, of which $7.9 million and $13.5 million, respectively, were held by subsidiaries in China. China imposes currency exchange controls on certain transfers of funds to and from China. The Company’s China subsidiaries are subject to pre-approval from the State Administration of Foreign Exchange (“SAFE”) for non-domestic financing. Additionally, the amount of cash available for transfer from the China subsidiaries for use by the Company’s non-China subsidiaries is also limited both by the liquidity needs of the subsidiaries in China and the restriction on foreign currency exchange by Chinese-government mandated limitations including currency exchange controls on certain transfers of funds outside of China. The Company’s China subsidiaries have no accumulated profit as of December 31, 2017 determined in accordance with Chinese accounting standards that can be paid as dividends. In 2017, 2016 and 2015, the Company’s China subsidiaries did not pay dividends. Management believes that the continuing efforts to stream-line the Company’s operations will enable the Company to control operating costs to be better aligned with operations, market demand and projected sales levels. As of December 31, 2017, the Company’s working capital was $78.5 million. Therefore, management believes both the Company’s China and non-China operations will have sufficient liquidities to finance working capital and capital expenditure needs for more than 12 months following the issuance date of these financial statements. Furthermore, the Company has concentrated its business in Asia, particularly Japan, India and Taiwan. Any unforeseen prolonged economic and /or political risks in these markets could impact the Company’s customers in making their respective investment decisions and could have a material impact on the foregoing assessment. There can be no assurance that additional financing, if required, will be available on terms satisfactory to the Company or at all, and if funds are raised in the future through issuance of preferred stock or debt, these securities could have rights, privileges or preference senior to those of the Company’s ordinary shares and newly issued debt could contain debt covenants that impose restrictions on the Company’s operations. Further, any sale of newly issued debt or equity securities could result in additional dilution to the Company’s current shareholders. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates: The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant judgment and estimates are used for revenue recognition, allowances for doubtful accounts and sales returns, tax valuation allowances, inventory write-down, impairment of property, plant and equipment, deferred costs, accrued product warranty costs, provisions for contract losses, investment impairments, going concern assessment, stock-based compensation expense, and loss contingencies among others. Actual results could differ materially from those estimates. Cash and Cash Equivalents: Cash and cash equivalents consist of highly liquid instruments with maturities of three months or less when acquired. Approximately 46.3%, or $36.9 million of cash and cash equivalents were held by the Company’s subsidiaries in the United States as of December 31, 2017. The remainder was held by the other UTStarcom entities throughout the world. As of December 31, 2017, approximately 9.9%, or $7.9 million, of the Company’s cash and cash equivalents were held by its subsidiaries in China, and China imposes currency exchange controls on transfers of funds outside of China. Restricted Cash: As of December 31, 2017, the Company had short-term restricted cash of $12.1 million, and had long-term restricted cash of $8.8 million. As of December 31, 2016, the Company had short-term restricted cash of $11.4 million, and had long-term restricted cash of $3.3 million. These amounts primarily collateralize the Company’s issuances of performance bonds, warranty bonds, and standby and commercial letters of credit. Investments: The Company’s investments consist principally of debt and equity securities classified as “available for sale,” and cost and equity method investments in privately held companies. The investments in equity securities of privately held companies in which the Company does not have the ability to exercise significant influence are accounted for under ASC 325, “ Investments-Other ” using the cost method. Under the cost method, these investments are carried at cost minus impairment. The investments in equity securities of privately held companies in which the Company has the ability to exercise significant influence, but does not own a majority equity interest or otherwise control are accounted for under ASC 323, “ Investments-Equity Method and Joint Ventures ” using the equity method. Investments in debt securities classified as available for sale are measured at fair value on the balance sheets under ASC 320, “ Investments-Debt and Equity Securities. ” Unrealized holding gains and losses for available-for-sale securities (including those classified as current assets) are excluded from earnings and reported in other comprehensive income until realized except as indicated in the following paragraph. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. The Company reviews several factors to determine whether the losses are other-than-temporary, including but not limited to: (i) the length of time the investment was in an unrealized loss position, (ii) the extent to which fair value was less than cost, (iii) the financial condition and near term prospects of the issuer, and (iv) the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. The determination of fair value of the investment involves considering factors such as current economic and market conditions, the operating performance of the companies including current earnings trends and forecasted cash flows, and other company and industry specific information. Investment impairments recorded as other-than-temporary were $1.7 million, $5.3 million, and $16.3 million, for the years ended December 31, 2017, 2016 and 2015, respectively. Revenue Recognition: The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonable assured. Most of the Company’s multiple element arrangements primarily involve the sale of hardware systems, installation and training. In addition, while not separately sold, the arrangement may include extended warranties that cover product repairs, maintenance services, and software updates for the software components that are essential to the functionality of the hardware systems or equipment. For multiple-element arrangements, the Company allocates revenue to each unit of accounting based on an estimated selling price at the arrangement inception. The estimated selling price for each element is based upon the following hierarchy: i) Vendor-specific objective evidence (“VSOE”) of selling price, if available, ii) Third-party evidence (“TPE”) of selling price, if VSOE of selling price is not available, or iii) Best estimate of selling price (“BESP”), if neither VSOE of selling price nor TPE of selling price are available. The Company establishes VSOE of selling price using the price charged for a deliverable when sold separately. When the Company is unable to establish selling price using VSOE, the Company uses BESP in the allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The Company’s management applies judgment in establishing pricing strategies and determines its BESP for a product or service using historical selling price trends and by considering multiple factors including, but not limited to, cost of products, gross margin objectives, geographies, customer classes, customer segment pricing practices and distribution channels. The determination of BESP is performed through consultation with its product management and marketing department and includes review and approval by our management. The Company’s management regularly reviews VSOE and BESP and maintain internal controls over the establishment and updates of these estimates. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” (“ASU 2014-09”). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 supersedes most existing US GAAP on revenue recognition and eliminate industry-specific guidance. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date (“ASU 2015-14”), which defers the effective date of ASU 2014-09 to January 1, 2018 for the Company. Early adoption is permitted. The Company adopts ASU 2014-09 using the modified retrospective method in the first quarter of 2018. The Company has completed a detailed review of revenue contracts representative of its business segments and their revenue streams as of the adoption date. The Company is established new accounting policies, implementing systems and processes (including more extensive use of estimates), and internal controls necessary to support the requirements of the new standard. Upon adoption, the Company expects a material impact to the opening balance sheet as of January 1, 2018, related to the cumulative effect of adopting the standard, primarily as a result of the item discussed below: Some of the Company’s contracts included final acceptance provisions or other price variability that precluded revenue recognition under Topic 605 due to the requirement that the revenue amount must be fixed or determinable. Topic 606 requires the Company to estimate and account for variable consideration as a reduction of the transaction price separately and not part of the revenue recognition consideration. This changes resulted in $7.4 million cumulative increase which is the combination of the Company’s unearned revenue $14.4 million and related deferred cost $7.0 million to the Company’s retained earnings as of January 1, 2018. Product Warranty: The Company provides a warranty on its equipment and terminal sales for periods generally ranging from one to two years from the time of final acceptance. At times, the Company has entered into arrangements to provide limited warranty services for periods longer than two years. The Company provides for the expected cost of product warranties at the time that revenue is recognized based on an assessment of past warranty experience and when specific circumstances dictate. The Company assesses the adequacy of its recorded warranty liability every quarter and makes adjustments to the liabilities if necessary. From time to time, the Company may be subject to additional costs related to non-standard warranty claims from its customers. If and when this occurs, the Company estimates additional accruals based on historical experience, communication with its customers and various assumptions that the Company believes to be reasonable under the circumstances. Such additional warranty accruals are recorded in the period in which the additional costs are identified. Specific warranty accruals are reversed upon the expiration of the warranty period and are recorded as reduction of cost of sales. Receivables: Although the Company evaluates customer credit worthiness prior to a sale, the Company provides an allowance for doubtful accounts for the estimated loss on trade when collection may no longer be reasonably assured. The Company assesses collectability of receivables based on a number of factors including analysis of creditworthiness, the Company’s historical collection history and current economic conditions, its ability to collect payment and on the length of time an individual receivable balance is outstanding. The Company’s policy for determining the allowance for doubtful accounts includes both specific allowances for balances known to be doubtful of recovery and a formula-based portfolio approach, based on aging of the accounts receivable, as a part of management’s review of the overall allowance for doubtful accounts. This formula-based approach involves aging of the Company’s accounts receivable and applying a percentage based on the Company’s historical experience. The Company evaluates the percentages applied to each category of aged accounts receivable periodically based on actual history of write-offs and collections and refines this formula-based approach accordingly for use in future periods. Receivable balances are written-off when the Company has sufficient evidence to prove that they are uncollectible. Inventories: Inventories consist of product held at the Company’s manufacturing facility and warehouses, as well as finished goods at customer sites for which the customer has taken possession, but based on specific contractual terms, title has not yet passed to the customer. The Company may ship inventory to existing customers that require additional equipment to expand their existing networks prior to the signing of an expansion contract. Inventories are stated at the lower of cost or market value, based on the first-in-first-out (“FIFO”) method of accounting. Write-downs are based on assumptions about future market conditions and customer demand, including projected changes in average selling prices resulting from competitive pricing pressures. The Company continually monitors inventory valuation for potential losses and obsolete inventory at its manufacturing facilities as well as at customer sites. If actual market conditions are less favorable than those projected by management, additional write-downs may be required. If actual market conditions are more favorable than anticipated, the previously written down inventory may be sold to customers and result in lower cost of sales and higher income from operations than expected in that period. Deferred Costs: Deferred costs consist of products shipped to the customer, but revenue has not yet been recognized due to revenue recognition criteria not fully met. Given that there is uncertainty about customer acceptance until the customer completes its internal testing and procedures, we defer the recognition of costs until the issuance of the final acceptance certificate to support its assertion of contract fulfillments. Management periodically assesses the recoverability of deferred costs and provides reserves against deferred cost balances when recovery of deferred costs is not probable. Recoverability is evaluated based on various factors including the length of time the product has been held at the customer site, the likelihood of collection, or it is determined that a related transaction will result in a gross margin loss. When a loss situation is identified, the deferred cost balance is impaired to reduce the value of the deferred cost to the amount of revenue that will be ultimately recognized for the transaction. Revenue and cost of sales are recorded when final acceptance is received from the customer. Property, Plant and Equipment: Property, plant and equipment are recorded at cost and are stated net of accumulated depreciation. Depreciation is provided for on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives or the term of the lease. When assets are disposed, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses are included in results of operations. The Company generally depreciates its property, plant and equipment over the following periods: Years Equipment and furniture 5 Computers and software 2 - 3 Automobiles 5 Leasehold improvements Lesser of the lease term or estimated useful life Depreciation expense was $0.6 million, $1.2 million, and $2.3 million, for the years ended December 31, 2017, 2016 and 2015, respectively. Impairment of Long-Lived Assets: Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If undiscounted expected future cash flows are less than the carrying value of the assets, an impairment loss is recognized based on the excess of the carrying amount over the fair value of the assets. Long-lived assets that are to be sold are measured at the lower of book value or fair value less cost to sell. Advances: Advances from customers represent cash received from customers before revenue recognition for the purchase of the Company’s products. Advertising Costs: The Company expenses all advertising costs as incurred. Payment to customers for marketing development costs are accounted for as incurred as a reduction of the revenue associated with customers. For the years ended December 31, 2017, 2016 and 2015, advertising costs totaled $0.1 million, $0.1 million, and $0.1 million, respectively. Operating Leases: The Company leases office space under operating lease agreements with an initial lease terms up to five years. Rental expense is recognized from the date of initial possession of the leased property on a straight-line basis over the term of the lease. Stock-Based Compensation: Stock-based compensation expense for all share-based payment awards granted to employees is determined based on the grant-date fair value. Stock-based compensation expense for restricted stock awards is measured based on the closing fair market value of the Company’s ordinary shares on the date of grant. Stock-based compensation expense for stock options is estimated at the grant date based on each option’s fair value as calculated by the Black-Scholes model. Stock-based compensation is expensed ratably on a straight-line basis over the requisite service period, which is generally the vesting term of the share-based payment awards. The performance-based restricted stock units are subject to the attainment of goals determined by the Compensation Committee of the Company’s Board of Directors. The Company records the relevant stock-based compensation for the performance-based restricted stock units based on the probability of meeting the performance conditions. Accumulated Other Comprehensive Income (“AOCI”): AOCI mainly consisted of foreign currency translation adjustments and the unrealized gain or loss from available-for-sale investments. The changes in AOCI, including the amounts reclassified to income, were as follows: Foreign currency (in thousands) Balance at December 31, 2015 $ Gain recorded in other comprehensive income Gain reclassified from AOCI to income ) Balance at December 31, 2016 $ Gain recorded in other comprehensive income Gain reclassified from AOCI to income ) Balance at December 31, 2017 $ As of December 31, 2017, no accumulated other comprehensive income or loss is attributable to non-controlling interests. The Company reclassifies foreign currency translation adjustments from AOCI to income upon sale or upon complete or substantially complete liquidation of investments in foreign entities, when the amounts attributable to the entities and accumulated in the translation adjustment component of equity is both: (a) removed from the separate component of equity; and (b) reported as part of the gain or loss on sale or liquidation of the investment for the period during which the sale or liquidation occurs. During fiscal 2016, the Company recognized and reclassified $0.1 million to net income from cumulative translation adjustment previously recorded in accumulated to other comprehensive income upon the liquidation of two entities. During fiscal 2017, the Company recognized and reclassified $1.7 million to net income from cumulative translation adjustment previously recorded in accumulated other comprehensive income upon the liquidation of one entity. The prior cumulative translation adjustment primarily resulted from the difference between the local functional currency and the Company’s reporting currency. Income Taxes: The Company is subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company recognizes the tax benefit (expense) from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company recognizes interest expense and penalties related to income tax matters as part of the provision for income taxes. The Company recognizes deferred income taxes as the difference between the tax bases of assets and liabilities and their consolidated financial statement amounts based on enacted tax rates. Management judgment is required in the assessment of the recoverability of the Company’s deferred tax assets based on its assessment of projected taxable income. Numerous factors could affect the Company’s results of operations in the future. If there was a significant decline in the Company’s future operating results, its assessment of the recoverability of its deferred tax assets would need to be revised, and any such adjustment to its deferred tax assets would be charged to income in that period. If necessary, the Company records a valuation allowance to reduce deferred tax assets to an amount management believes is more likely than not to be realized. Changes in estimates of taxable income in the future could result in reversal of the valuation allowances which would be credited to income in the year of reversal. On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) was enacted. The Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate income tax rate (“federal tax rate”) from 35% to 21% effective January 1, 2018, implementing a modified territorial tax system, and imposing a mandatory one-time transition tax on accumulated earnings of foreign subsidiaries. In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118, which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Act. The measurement period ends when a company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. The final impact of the Tax Act may differ from the above provisional amount due to changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, by changes in accounting standard for income taxes and related interpretations in response to the Tax Act, any updates or changes to estimates used in the provisional amounts. Financial Instruments: Financial instruments consist of cash and cash equivalents, short and long-term investments, notes receivable, accounts receivable and payable and accrued liabilities. The carrying amounts of cash and cash equivalents, bank notes, accounts receivable and payable, notes receivable, and accrued liabilities approximate their fair values because of the short-term nature of those instruments. The fair value of long term investments in debt and equity securities is determined based on quoted market prices or available information about investees. Foreign Currency Translation: The Company’s operations are conducted through international subsidiaries where the local currency is the functional currency and the financial statements of those subsidiaries are translated from their respective functional currencies into U.S. Dollars which is the functional currency of the Company. All foreign currency assets and liabilities are translated at the period-end exchange rate and all revenues and expenses are translated at the average exchange rate for the period. The effects of translating the financial statements of foreign subsidiaries into U.S. Dollars are reported as a cumulative translation adjustment, a separate component of accumulated other comprehensive income in shareholders’ equity. The foreign currency translation gain (loss) related to the remeasurement of transactions denominated in other than the functional currency is included in other income (expenses), net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) . In connection with this remeasurement process, the Company recorded gains of $0.6 million and of $1.5 million and losses of $0.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. Earnings per Share: Basic earnings per share is computed by dividing the net loss available to shareholders by the weighted average number of the Company’s ordinary shares outstanding, as applicable, during the period, which excludes unvested restricted stock. Diluted earnings per share reflects the amount of net loss available to each ordinary share outstanding during the period plus number of additional shares that would have been outstanding if potentially dilutive securities had been issued. The Company’s potentially dilutive ordinary shares include outstanding stock options, unvested restricted stock, restricted stock units and performance- based units. The following table summarizes the total potential ordinary shares that were excluded from the diluted per share calculation, because their effect was anti-dilutive. Years ended December 31, 2017 2016 2015 (in thousands) Anti-dilutive stock options and awards/units outstanding — Total(1) — (1) Calculated using the treasury stock method, which assumes proceeds are used to reduce the dilutive effect of outstanding stock awards. Assumed proceeds include the unrecognized deferred compensation of share awards, and assumed tax proceeds from excess stock-based compensation deductions. For the year ended December 31, 2015, no potential ordinary shares were dilutive because of the net loss incurred in this year, therefore basic and dilutive EPS were the same. For the years ended December 31, 2016 and 2017, 1.4 million and 1.2 million potential ordinary shares were dilutive. After the dilution, the diluted earnings per share during the years ended December 31, 2016 and 2017 were as follows. 2017 2016 (in thousands, except per shares amounts) Net Income attributable to UTStarcom Holdings Corp. $ $ Weighted average shares outstanding—Diluted Net Income per shares attributable to UTStarcom Holdings Corp.—Diluted $ $ Recent Accounting Pronouncements: In November 2016, the FASB issued ASU 2016-18, “ Statement of Cash Flows-— Restricted Cash (a consensus of the FASB Emerging Issues Task Force) ”, effective for fiscal years beginning after December 15, 2017, and interim periods within that fiscal year. The standard addresses whether restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopts the ASU 2016-18 using the retrospectively method in the first quarter of 2018, and it would decrease the Company’s cash used in investing activities by $6.2 million in 2017, and would decrease the Company’s cash provided by investing by $1.3 million in 2016. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” (“ASU 2014-09”). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 supersedes most existing US GAAP on revenue recognition and eliminate industry-specific guidance. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date (“ASU 2015-14”), which defers the effective date of ASU 2014-09 to January 1, 2018 for the Company. Early adoption is permitted. The Company adopts ASU 2014-09 using the modified retrospective method in the first quarter of 2018. In January, 2017, the FASB issued 2017-01 “ Business Combinations ”, effective for the annual reporting period beginning after December 15, 2017, and interim period within that period. This updated clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or business. The Company evaluated the impact of adopting the new standard on its consolidated financial statements and concluded there was no material impact to the Company’s financial statements. In February 2017, the FASB issued ASU 2017-05 “ Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) ”, effective for the annual reporting period beginning after the December 15, 2017, including the interim reporting period within that period. This update provides guidance on the recognition of gains and losses on transfers of nonfinancial assets and in substance nonfinancial assets to counterparties that are not customers. The Company evaluated the impact of adopting the new standard on its consolidated financial statements and concluded there was no material impact to the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09 “ Compensation—Stock Compensation (Topic 718)” , effective for the annual report period beginning after the December 15, 2017, including the interim reporting period within that period. This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The Company evaluated the impact of adopting the new standard on its consolidated financial statements and concluded there was no material impact to the Company’s financial statements. In January 2018, the FASB issued ASU 2018-01 “ Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842”. The effective date and transition requirement for this amendment is the same as the effective date and transition requirement in update 2016-02. This update provides an optional transition practical expedient to not evaluate under Topic 842 land easements that exist or expired before the entity’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. In addition, the update clarifies that a new or modified land easement should be assessed prospectively under Topic 842 to determine whether it is or contains a lease. The Company evaluated the impact of adopting the new standard on its consolidated financial statements and concluded there was no material impact to the Company’s financial statements. In February 2018, the FASB issued ASU 2018-02 “ Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” , effective for the annual report period beginning after the December 15, 2018 including the interim reporting period within that period. This update allows companies to reclassify from Accumulated Other Comprehensive Income to Retained Earnings stranded tax effects resulting from the enactment of the Tax Cuts and Jobs Act (the “Tax Act”). The Company will adopt this accounting standard update in the first quarter of 2018 on a retrospective basis. The application of this accounting standard update will not have a material impact on the Company’s Consolidated Financial Statements. |
DIVESTITURES
DIVESTITURES | 12 Months Ended |
Dec. 31, 2017 | |
DIVESTITURES | |
DIVESTITURES | NOTE 3-DIVESTITURES During the year ended December 31, 2012, the Company completed its divestiture of the IPTV equipment business. IPTV operations On August 31, 2012, the Company completed a sale of its IPTV business to an entity founded by our former CEO (the “Buyer”), for an aggregate purchase price of $30.0 million related to the net liabilities transferred. In connection with this transaction, we recorded a net loss of $17.5 million during 2012. The Company is still the primary obligor for certain contracts that some customers were not willing to assign to the Buyer. Even though the Company signed back-to-back contracts to transfer all obligations and associated economic risks and benefits to the Buyer, from the customer point of view, the Company is still the sole and only obligor to their contracts. If the Buyer fails to fulfill its obligations with respect to these un-assigned contracts with the Company, the Company is still obligated to fulfill its obligations under the un-assigned contracts. Therefore, the Company did not derecognize the related liabilities of those un-assigned contracts. According to the back-to-back contracts with the Buyer, all of the obligations and associated economic risks and benefits of the un-assigned customer contracts were transferred to the Buyer. Therefore, the Company recorded the portion of the payment made to the Buyer at the time of the divestiture as service cost payment to fulfill the remaining liabilities related to those un-assigned contracts. The Company will settle those un-assigned contracts when the legal obligation is at minimal or no impact. There will be no gross profit impact to settle those contracts. As of December 31, 2017 and 2016, the Company had both liabilities and deferred costs of $5.9 million and $10.2 million, respectively, related to these remaining un-assigned contracts. |
COMPREHENSIVE INCOME (LOSS)
COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Dec. 31, 2017 | |
COMPREHENSIVE INCOME (LOSS) | |
COMPREHENSIVE INCOME (LOSS) | NOTE 4-COMPREHENSIVE INCOME (LOSS) Total Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015 consisted of the following: Years ended December 31, 2017 2016 2015 (in thousands) Net income (loss) $ $ $ ) Other comprehensive loss Realized loss from available-for-sales investment — — ) Net Change in Foreign currency translation ) Total comprehensive income (loss) ) Comprehensive loss attributable to non-controlling interests (1) — — Comprehensive income (loss) attributable to UTStarcom Holdings Corp. $ $ $ ) (1) Comprehensive loss attributable to non-controlling interests consisted solely of net loss. |
BALANCE SHEET DETAILS
BALANCE SHEET DETAILS | 12 Months Ended |
Dec. 31, 2017 | |
BALANCE SHEET DETAILS | |
BALANCE SHEET DETAILS | NOTE 5-BALANCE SHEET DETAILS The following tables provide details of selected balance sheet items: December 31, December 31, (in thousands) Inventories: Raw materials $ $ Work in process Finished goods (1) Total Inventory $ $ (1) Includes finished goods at customer sites of approximately $10.6 million and $14.5 million at December 31, 2017 and 2016, respectively, for which the customer has taken possession, but based on specific contractual terms, title has not yet passed to the customer and for which revenue has not yet been recognized. December 31, December 31, (in thousands) Prepaid and other current assets Prepaid tax $ $ Advance to suppliers (1) Other receivable Prepaid others Total Prepaid and other current assets $ $ (1) The $6.5 million advance to supplier as of December 31, 2017 for financing purpose. December 31, December 31, 2017 2016 (in thousands) Property, plant and equipment, net: Leasehold improvements $ $ Automobiles Software Computer, Equipment and Furniture Other — Total Less: accumulated depreciation ) ) Total Property, plant and equipment, net $ $ During the years ended December 31, 2017, 2016 and 2015, the Company wrote-off $0.6 million with accumulated depreciation of $0.6 million, $19.6 million with accumulated depreciation of $19.6 million, and $2.8 million with accumulated depreciation of $2.8 million of fully depreciated property, plant and equipment, respectively. In 2015, the Company wrote off $0.1 million of lease improvements related to the early termination of a lease of the Hangzhou facility. December 31, December 31, (in thousands) Other current liabilities: Accrued contract costs (1) $ $ Accrued payroll and compensation Warranty costs Accrued professional fees Accrued other taxes Other Total other current liabilities $ $ (1) Accrued contract costs include $7.3 million and $2.9 million cost related to product and service sales contracts from India as of December 31, 2017 and 2016, respectively. December 31, December 31, (in thousands) Other long-term liabilities Non-current income tax payable $ $ Other Total other long-term liabilities $ $ |
CASH, CASH EQUIVALENTS AND SHOR
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2017 | |
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | |
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | NOTE 6-CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS Cash and cash equivalents, consisting primarily of bank deposits and money market funds, are recorded at cost which approximates fair value because of the short-term nature of these instruments. Short-term investments consist of available-for-sale securities and held to maturity investment with original maturities longer than three months and less than twelve months when acquired. The Company holds $3.1 million held to maturity investments in India as of December 31, 2017. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. In making this determination, the Company reviews several factors to determine whether the losses are other-than-temporary, including but not limited to: (i) the length of time the investment was in an unrealized loss position, (ii) the extent to which fair value was less than cost, (iii) the financial condition and near term prospects of the issuer, and (iv) the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. At December 31, 2016, the Company had investments in convertible bonds and redeemable convertible preferred stock that were classified as available-for-sale securities and are subject to fair value accounting. Investments in debt securities classified as available for sale will be measured subsequently at fair value on the balance sheets. An impairment charge will be recognized by the Company when a decline in the fair value below the cost basis is judged to be other-than-temporary. The following table shows the break-down of the Company’s total long-term investments as of December 31, 2017 and December 31, 2016: Accounting December 31, December 31, Method 2017 2016 (in thousands) UTStarcom Hong Kong Holdings Ltd Cost Method $ $ GCT Semiconductor, Inc. Cost Method — — Xalted Networks Cost Method — — Cortina Cost Method — — SBI Cost Method — — Total Investments using Cost Method ACELAND Equity Method UiTV Equity Method — — AioTV Equity Method — — Shareholder Loan to ACELAND Equity Method — — Total Investments using Equity Method AioTV AFS — Total Investments Classified as AFS — Total Investment $ $ UTStarcom Hong Kong Holdings Ltd., On August 31, 2012, the Company completed the sale of our IPTV business to UTStarcom Hong Kong Holdings Ltd.to its former Chief Executive Officer. On the same day, the Company purchased a $20.0 million Convertible Bond from UTStarcom Hong Kong Holdings Ltd. which bears interest at 6.5% per annum and matured on August 31, 2017. On April 7, 2015, the Company entered an agreement with UTStarcom Hong Kong Holdings Ltd. for the conversion of the $20.0 million Convertible Bond. Pursuant to the agreement, UTStarcom Hong Kong Holdings Ltd. paid $10.0 million in cash as partial payment of the principal of the Convertible Bond. The remaining principal and interest of the Convertible Bond were converted to 14% of equity interest of UTStarcom Hong Kong Holdings Ltd. The Company used the cost method to account for this investment. The Company assesses the fair value every year-end. In 2015, the Company recorded $6.5 million investment impairment. In 2016 and 2017, the Company assessed the fair value of UTStarcom Hong Kong Holdings Ltd, and concluded no impairment was need to record. As of December 31, 2017, the book value of this investment was $3.5 million. Cortina In September 2004, the Company invested $2.0 million in Series A preferred stock of ImmenStar, Inc., which was then acquired by Cortina Systems, Inc., (“Cortina”) in February 2007. In 2015 and 2016, through the sale of shares and proceeds received, the Company recognized gains of $1.6 million and $0.1 million which were included in Other Income. GCT Semiconductor In October 2004, the Company invested $3.0 million in Series D preferred convertible stock of GCT Semiconductor, Inc., or GCT, which designs, develops and markets integrated circuit products for the wireless communications industry. This investment represents approximately a 0.4% interest in GCT. The Company assesses the fair value every year-end. In 2012 and 2016, the Company recorded $2.1 million and $0.8 million investment impairment, respectively. As of December 31, 2016, the book value of the investment was zero. SBI NEO Technology A Investment LPS, or SBI In 2008, 2010, 2011 and 2012, the Company invested $0.5 million, $0.7 million, $0.7 million and $0.6 million into SBI NEO Technology, or (“SBI”), respectively, to maintain a partnership interest of approximately 2%. The Company concluded that it does not have a controlling interest in SBI and accounts for the investment in SBI using the cost method. In 2014, 2015, and 2016, the Company received $0.1 million, $0.26 million and $0.7 million from SBI to reduce the SBI investment. In 2016, the Company recorded impairment of 0.2 million. In 2017, the Company received a final refund of $0.5 million and the book value of the investment was reduced to zero. Aceland Investment Limited In December 2010, the Company invested $2.1 million into Aceland Investments Limited, or (“Aceland”). In the second quarter of 2011, the Company extended a shareholder loan to Aceland in the amount of $7.1 million with a maturity date of December, 31, 2015. The Company owned an approximately 35% interest in Aceland and accounted for the investment in Aceland using the equity method. In 2015, the Company recorded a $1.0 million impairment charge to the Aceland investment. In 2016, Aceland returned capital of $6.7 million to the Company through a cash payment and the Company realized a $1.0 million gain of foreign exchange. In 2017, the Company realized a $0.2 million loss as a result of the depreciation of the US Dollar deposit. As of December 31, 2017, the book value of the investment was $2.4 million. AioTV Inc. In November 2012, the Company invested $8 million in Series B Preferred Stocks of AioTV, at $0.320937 per share. AioTV stands for “all-in-one TV” and is an international cloud-based video aggregation and distribution platform. The investment objective is to give the Company access to technology that will support its rollout of subscription-based, value- added media services. The Company owned a 45% equity interest in AioTV as of December 31, 2017. The preferred stock has been classified as available- for-sale securities as it is not considered to be in-substance common stock due to their redemption feature and is thus subject to fair value accounting. AioTV currently cooperates with consumer electronics makers, cable and telecommunications service providers in North America, South America and Europe. To estimate its fair value in 2016, the Company used the option-pricing method and Ross and Rubinstein Binomial Model (“Binomial-Model”), which is based on the fair value of invested capital evaluated by an income approach. The significant inputs for the valuation model included the following: Year Ended December 31, 2016 Total fair value of invested Capital as at valuation date (in thousands) Risk free rate of interest % Dividend yield % Expiration date 2017/11/14 Volatility % The fair value of the invested capital has been determined using income approach including a discounted cash flow model and unobservable inputs including assumptions of projected revenue, expenses, capital spending, other costs and a discount rate of 50% by using the weighted average cost of capital method in 2016. Risk free rate of interest adopted for the valuation was estimated based on the US Sovereign Strips Curve plus default risk spread between US and China. Dividend yield was assumed to be 0% considering that AioTV plans to retain profit for corporate expansion and hence have no plan to distribute dividends in the near future. Expiration date is the expected date of illiquidity event estimated by management. The expected equity volatility was estimated based on the annualized standard deviation of the daily stock price return of comparable companies for the period before the valuation date and with a similar time span as to expiration. Based on the above assessment of the preferred stock, the Company concluded the fair value is less than the book value of the preferred stock as of December 31, 2016, which will not recover in foreseeable future, thus in the year ended December 31, 2016, the Company recorded $4.3 million in impairment charges in investment impairments. On December 7, 2015, the Company invested $0.5 million in a convertible bond of AioTV. The convertible bond bears interest at 10.0% per annum and mature on May 7, 2016 and subsequently extended to March 28, 2017. The Company converted the bond to 2,269,856 common shares at the conversion price of $0.253790596 per share on May 30, 2017. In the fourth quarter of 2016, the Company invested an additional $0.3 million in convertible bonds issued by AioTV. The convertible bond bears interest at 10% per annum and mature on October 6, 2017.The convertible bonds are classified as an AFS security and are subject to fair value accounting. During 2016, and in connection with the fair value analysis of the investment capital, the Company assessed the fair value of these convertible bonds, and concluded that there was no impairment. As of December 31, 2016, the carrying amount on the investment of AioTV was $1.7 million, including $0.9 million preferred shares and $0.8 million convertible bonds. On May 30, 2017, the Company converted all the existing 25,527,008 Series B Preferred Shares of AioTV into 25,527,008 common shares of AioTV at a conversion price of $0.320937 per share, and converted $576,068 of the principal amount and the accrued and unpaid interests of the $0.5 million convertible debenture issued on December 7, 2015 into 2,269,856 common shares of AioTV at a conversion price of $0.253790596 per share. After this conversion, the Company deemed that we have significant influence in AioTV and use the equity method to account for the investment in AioTV. On May 30, 2017, the Company signed a “Note Purchase Agreement” with AioTV. Pursuant to the agreement, the valuation cap of AioTV was reduced to $0.16 million, and the Company promised to purchase $0.8 million convertible promissory note including $0.32 million existing convertible bond issued in October 2016. As the result, the Company recorded $1.3 million investment impairment in the second quarter of 2017 and invested $0.1 million and $0.38 million in the second and third quarter of 2017 in a convertible promissory note, respectively. In the third quarter of 2017, the Company recorded $0.1 million in losses to reflect its 45% interest in AioTV losses. After the recorded balance of common stock is reduced to zero, the Company records 45% of AioTV losses against our convertible promissory note investment balance until the carrying value of the convertible promissory note investment balance is reduced to zero. In the third and fourth quarter of 2017, the Company recorded $0.2 million and $0.2 million, respectively, in losses to reflect its 45% of AioTV losses. As of December 31, 2017, the Company assessed the fair value of AioTV, and recorded a $0.4 million impairment charge to this investment, reducing its book value to zero. UiTV Media Inc. or UiTV On October 16, 2010, the Company invested $ 30.0 million in UiTV Media Inc., or (“UiTV”), $10.0 million of which was paid by the Company’s common shares that it had the repurchased right and $20.0 million of which was paid by cash. The Company recorded this transaction as an acquisition because the Company owned 75% interest of UiTV and had the controlling rights. The transactions closed on November 8, 2010. On April 15, 2012, the Company exercised its repurchase right, and this trigged deconsolidation of UiTV from the Company’s consolidated financial statements starting from June 21, 2012 as the Company lost the controlling right due to reduced ownership from 75% to 49% and loss of a board of directors seat. As the result, the Company accounted for this investment using the equity method. From December 3, 2012 to December 31, 2015, the Company has totally purchased $35.1 million convertible bonds that bear interest at 6.5% per annum with various maturity dates, and subsequently all maturity dates were extended to December 31, 2015. In 2013 and 2014, the Company recorded a total of $9.6 million and $5.3 million, respectively, in losses for the preferred stock investment to reflect 49% interest in UiTV losses. After the value of the preferred shares was reduced to zero, the Company started to record 100% of UiTV losses against our convertible bond investment balance until the carrying value of the convertible bond investment balance was reduced to zero. Therefore, in 2014 and 2015, the Company recorded $3.6 million and $14.0 million in losses to reflect 100% of UiTV losses. At every year-end, the Company assessed the fair value of the UiTV, and recorded impairment charges of $9.1 million, $2.4 million and $6.0 million in 2013, 2014 and 2015, respectively. The convertible bond investments balance was reduced to zero as of December 31, 2015. The Company presents the below summarized financial information of the Company’s equity method investees, other than those whose financial statements have been separately presented. Condensed Condensed Condensed (in thousands) (in thousands) (in thousands) Operating data: Revenue $ $ — $ — Gross profit $ $ — $ — Income (loss) from operations $ ) $ $ ) Net income (loss) $ ) $ $ ) Net income (loss) attributable to Equity method investees $ ) $ $ ) Year Ended Year Ended Year Ended (in thousands) (in thousands) (in thousands) Balance sheet data: Current assets $ $ $ Long-term assets $ $ $ Current liabilities $ ) $ ) $ ) Long-term liabilities $ — $ — $ — Non-controlling interests $ — $ — $ — Fair Value Measurements Pursuant to the accounting guidance for fair value measurements and its subsequent updates, fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The accounting guidance also establishes a three-tier fair value hierarchy which requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The fair value hierarchy prioritizes the inputs into three levels that may be used in measuring fair value as follows: Level 1-observable inputs such as quoted prices in active markets for identical assets or liabilities. Level 2-inputs other than the quoted prices in active markets for identical assets or liabilities that are observable either directly or indirectly. Level 3-unobservable inputs based on the Company’s assumptions. The Company’s financial instruments consist principally of cash and cash equivalents, short-term investments, restricted cash, accounts receivable, long-term investments, accounts payable and certain accrued expenses. Short-term investments consist of bank notes, available-for-sale securities and term deposits with maturities longer than three months and less than one year when acquired. As of December 31, 2017 and 2016, the respective carrying values of financial instruments except for long-term investments approximated their fair values based on their short-term maturities. As of December 31, 2017, the combined fair value of the entity’s long-term investments in available-for-sale Level 3 convertible bond and redeemable securities was nil. The following is a summary of available-for-sale investment as of December 31, 2017: Cost Cash Impairment Transfer-out Realized Estimated (in thousands) Shares of a private company $ $ ) $ — $ — $ — $ — Convertible bonds of privately-held company — ) ) — — Preferred convertible shares of private company — ) — — — Total available-for-sale investments $ $ ) $ ) $ ) $ — $ — The following is a summary of available-for-sale investment as of December 31, 2016: Transfer- Impairment from Cash charges and for-sale Realized Estimated Cost Collection equity losses investments gain fair value (in thousands) Shares of a private company $ $ — $ — $ — $ — $ Convertible bonds of a private company — — — — Preferred convertible shares of a private company — ) — — Total available-for-sale investments $ $ — $ ) $ — $ — $ Financial assets measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy as described above were as follows: Level 1 Level 2 Level 3 Total (in thousands) As of December 31, 2017 Short-term investments $ — $ — $ — $ — Long-term investments — — — — As of December 31, 2016 Short-term investments — — Long-term investments $ — $ — $ $ The following is the changes in financial assets using unobservable inputs (Level 3) for the years ended December 31, 2017, 2016 and 2015. Amount In thousands As of December 31, 2014 $ Less: Share of loss from associates ) Less: Impairment charges ) Less: Cash collection ) Less: Transfer-out from available-for-sale investments ) Add: New investment in convertible bonds Add: Unrealized gain ) As of December 31, 2015 $ Less: Impairment Charges ) Add: New investment in convertible bonds As of December 31, 2016 $ Less: Impairment charges ) Less: Transfer-out from available-for-sale investments ) As of December 31, 2017 $ — |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 7-COMMITMENTS AND CONTINGENCIES Leases The Company has entered into various non-cancelable operating, office space, manufacturing facilities leases. Future minimum lease payments under all non-cancelable operating leases with an initial term in excess of one year as of December 31, 2017 are as follows: Amount (in thousands) 2018 $ 2019 2020 2021 2022 — Thereafter — Total $ Rent expense for the years ended December 31, 2017, 2016 and 2015 was $1.9 million, $1.4 million and $1.6 million, respectively. India Department of Telecommunication Security and Supply Chain Standards India’s Department of Telecommunications (“DOT”) requires equipment manufacturers to meet certain security and supply chain standards to the satisfaction of Indian authorities. The Company entered into these separate general security agreements with several customers in India which establish detailed security and supply chain standards covering products supplied to these telecommunication customers as required by the Indian authorities. When signing agreement in 2010, we assumed we had unlimited penalty uncertainty and no revenue was recognized for any orders associated with the DOT agreement. In 2015, the Company reassessed the revenue recognition on these agreements and concluded the likelihood of DOT non-compliance was low. This assessment is based on several factors, including 1) decreasing activities under these customer contracts; 2) no reports or findings of any spyware or malware in the equipment supplied by the Company in the past 5 year period, which is approximately the estimated useful life of such kind of equipment; and 3) quality assurance reports about the reliability of our equipment. As a result of this assessment, the Company considered it appropriate to recognize revenue. In 2015, the Company recognized $11.8 million revenues with $5.4 million cost of goods, which included equipment revenue of $5.6 million with $5.4 million cost of goods, and equipment based service revenue of $6.2 million with $0.01 million cost of goods. Contractual obligations and commercial commitments Letters of credit: The Company issues bid bond, commercial letters of credit or standby letters of credit primarily to support international sales activities outside of China and in support of purchase commitments. When the Company submits a bid for a sale, often the potential customer will require that the Company issue a bid bond or a standby letter of credit to demonstrate its commitment through the bid process. In addition, the Company may be required to issue standby letters of credit as guarantees for advance customer payments upon contract signing or performance guarantees. The standby letters of credit usually expire without being drawn by the beneficiary thereof. Finally, the Company may issue commercial letters of credit in support of purchase commitments. As of December 31, 2017, the Company’s outstanding letters of credit approximated $20.9 million. These balances are included in the balance of Short-term restricted cash and Long-term restricted cash. Purchase commitments: The Company is obligated to purchase raw materials and work-in-process inventory under various orders from various suppliers, all of which should be fulfilled without adverse consequences material to the Company’s operations or financial condition. At December 31, 2017, the Company had outstanding purchase commitments, including agreements that are non-cancelable and cancelable, approximating $106.3 million. Intellectual property: Certain sales contracts include provisions under which customers are indemnified by the Company in the event of, among other things, a third party claim against the customer for intellectual property rights infringement related to the Company’s products. There are no limitations on the maximum potential future payments under these guarantees. The Company has not accrued any amounts in relation to these provisions as no such claims have been made and the Company believes it has valid enforceable rights to the intellectual property embedded in its products. Uncertain Tax Positions: As of December 31, 2017, the Company had $18.7 million of gross unrecognized tax benefits, of which $2.0 million related to tax benefits that, if recognized, would impact the annual effective tax rate. The remaining $16.7 million gross unrecognized tax benefits, if recognized, would impact certain deferred tax assets. Litigation: The Company is a party to other litigation matters and claims that are normal in the course of operations, and while the results of such litigation matters and claims cannot be predicted with certainty, management of the Company believes that the final outcome of such matters will not have a material adverse impact on the Company’s financial position, results of operations or cash flows. |
COMMON STOCK REPURCHASE AND ISS
COMMON STOCK REPURCHASE AND ISSUANCE | 12 Months Ended |
Dec. 31, 2017 | |
COMMON STOCK REPURCHASE AND ISSUANCE | |
COMMON STOCK REPURCHASE AND ISSUANCE | NOTE 8-COMMON STOCK REPURCHASE AND ISSUANCE On November 12, 2014, the Company’s Board of Directors approved a share repurchase program of up to $40.0 million of its ordinary shares outstanding over the 24 months through 2016. On November 4, 2016, the Company’s Board of Directors approved an extension for this program to November 2018. For the years ended December 31, 2017, 2016 and 2015, the Company repurchased 72,739, 2,054,655 and 1,563,302 shares at the cost of $0.1 million, $4.1 million and $3.7 million, respectively. All of the repurchased shares under the repurchase program are classified as treasury shares of the Company until they are retired or reissued. |
COMMON STOCK AND STOCK INCENTIV
COMMON STOCK AND STOCK INCENTIVE PLANS | 12 Months Ended |
Dec. 31, 2017 | |
COMMON STOCK AND STOCK INCENTIVE PLANS | |
COMMON STOCK AND STOCK INCENTIVE PLANS | NOTE 9-COMMON STOCK AND STOCK INCENTIVE PLANS Stock Incentive Plans As of December 31, 2017, the Company has the stock incentive plans described below. Substantially all outstanding awards are subject to potential accelerated vesting in the event of a change in control of the Company. The Company repurchases and cancels its ordinary shares forfeited with respect to the tax liability associated with certain vesting of restricted stock and restricted stock unit grants under these plans. 2017 Equity Incentive Plan: The 2017 Equity Incentive Plan, or (the “2017 Plan”), was approved by the Board of Director on November 4, 2016, and will expire on December 31, 2021. The 2017 Plan provides for the grant of the following types of incentive awards: (i) stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance shares and performance units, and (vi) other stock or cash awards (“Award,” collectively, “Awards”). Those who are eligible for Awards under the 2017 Plan include employees, directors and consultants who provide services to the Company and its affiliates. The maximum aggregate number of shares that may be awarded and sold under the Plan is 2,000,000 Shares plus (i) any shares that, as of December 31, 2016, have been reserved but not issued pursuant to any awards granted under UTStarcom Holdings Corp.’s Amended and Restated 2006 Equity Incentive Plan (the “2006 Plan”), (ii) any shares subject to stock options or similar awards granted under the 2006 Plan that expire or otherwise terminate without having been exercised in full and Shares issued pursuant to awards granted under the 2006 Plan that are forfeited to or repurchased by the Company. The shares may be authorized but unissued, or reacquired common Stocks. As of December 31, 2017, 1,165,623 shares underlying options and restricted stock awards and units were outstanding under the 2017 Plan. The 2006 Equity incentive plan expired on December 31, 2016, and 1,546,927 ordinary shares available for grant under this plan were transferred to the 2017 equity incentive plan. Stock Award and Stock Option Activity During 2017, the Company granted equity awards primarily consisting of restricted stock, restricted stock units, stock options and performance shares. Such awards generally vest over a period of four years from the vesting start date. Restricted stock has the voting rights of ordinary shares and the shares underlying restricted stock are issued and outstanding. As of December 31, 2017, the number of ordinary shares available for issuance pursuant to future grants under the 2017 plan, including remaining unissued shares under Prior Plans that have been transferred into the 2017 plan were 3,469,239. The 2006 Plan expired on December 31, 2016, and 960,940 shares were transferred to the 2017 Plan that was approved by the Board of Director on November 4, 2016. The following table summarizes the Company’s stock option activities: Weighted Number of average shares exercise outstanding price (in thousands) Options Outstanding, December 31, 2016 $ Options Granted — — Options Exercised ) Options Forfeited or Expired ) Options Outstanding, December 31, 2017 $ Under the Plans, the Company granted restricted stock awards. Restricted stock awards are unvested stock awards that may include grants of restricted stock or grants of restricted stock units. Such awards generally vest over a period of four years from the date of grant. Restricted stock has the voting rights of ordinary share and the shares underlying restricted stock are considered to be currently issued and outstanding. Restricted stock units do not have the voting rights of ordinary shares, and the shares underlying the restricted stock units are not considered issued and outstanding. The expense for such awards is based on the fair market value of the shares at the date of grant and is recognized on a straight- line basis over the requisite service period. The grant of restricted stock awards is deducted from the shares available on a one to one basis for grant under the Company’s stock plan. Unvested restricted awards as of December 31, 2017 and changes during the year ended December 31, 2017 is summarized below: Weighted average grant date Shares fair value (in thousands) Total nonvested restricted stock at December 31, 2016 $ Granted Vested ) Forfeited ) Total nonvested restricted stock at December 31, 2017 $ During 2017, 0.4 million shares of restricted stock awards vested. The total fair value of restricted stock awards vested, as measured on the date of vesting, during 2017 was $0.8 million. During 2017, the Company also granted 0.1 million restricted stock awards. The following table summarizes significant ranges of outstanding and exercisable stock options as of December 31, 2017: Weighted Number of shares Average Weighted Number of shares Weighted Range of Outstanding Remaining Average Exercisable Average Exercise Prices as of 12/31/2017 Contractual Term Exercise Price as of 12/31/2017 Exercise Price $ — $ $ $ $ — $ $ $ $ — $ $ $ Number of shares Weighted average exercise Options exercisable as of December 31, 2017 $ Options vested and expected to vest as of December 31, 2017 $ The intrinsic value represents the total pre-tax intrinsic value and is calculated as the difference between the market value as reported by NASDAQ on December 29, 2017 of $5.63 and the exercise price of the in-the-money shares. During 2017, the total pre-tax intrinsic value of options exercised was negligible. The weighted average remaining contractual life of options exercisable was 2.08 years, and the weighted average remaining contractual life of options expected to vest was 5.03 years as of December 31, 2017. The weighted average remaining contractual life of options exercisable was 2.13 years, and the weighted average remaining contractual life of options expected to vest was 4.45 years as of December 31, 2016. 2006 Equity Incentive Plan: The 2006 Equity Incentive Plan, or 2006 Plan, was implemented on July 21, 2006 after being adopted by the Board of Directors on June 6, 2006 and approved by the Company’s stockholders on July 21, 2006, expired on December 31, 2016. The 2006 Plan replaces the 1997 Plan, the 2001 Plan, and the 2003 Plan, (collectively, the “Prior Plans”), and no further awards will be granted pursuant to the Prior Plans. The 2006 Plan provides for the grant of the following types of incentive awards: (i) stock options, (ii) stock appreciation rights, (iii) restricted stock, (iv) restricted stock units, (v) performance shares and performance units, and (vi) other stock or cash awards. Those who are eligible for Awards under the 2006 Plan include employees, directors and consultants who provide services to the Company and its affiliates. The maximum aggregate number of shares that may be awarded and sold under the 2006 Plan is 1,500,000 shares, which was amended on January 4, 2016, to add an additional 1,500,000 shares to the 2006 Plan, plus (i) any shares that have been reserved but remain unissued under the Prior Plans as of July 21, 2006, and (ii) any shares subject to stock options or similar awards granted under the Prior Plans that expire or become exercisable without having been exercised in full and shares issued pursuant to awards granted under the Prior Plans that are forfeited to or repurchased by the Company. As of December 31, 2016, the number of shares transferred from the Prior Plans to the 2006 plan totaled 8,474,347. As of December 31, 2016, 2,042,798 options and restricted stock awards and units were outstanding under the 2006 Plan. The Board of Directors or the Compensation Committee of the Board, or Compensation Committee, administers the 2006 Plan. Subject to the terms of the 2006 Plan, the Administrator has the sole discretion to select the employees, consultants, and directors who will receive Awards, determine the terms and conditions of Awards, and to interpret the provisions of the 2006 Plan and outstanding Awards. Options granted under the 2006 Plan generally vest and become exercisable over four years. Awards granted under the 2006 Plan are generally not transferable, and all rights with respect to an Award granted to a participant generally may be exercised during a participant’s lifetime only by the participant; provided, however, that with the Administrator’s approval, a participant may (i) transfer an Award to a participant’s spouse or former spouse pursuant to a court-approved domestic relations order which relates to the provision of child support, alimony payments or marital property rights, or (ii) transfer an Award by gift to or for the benefit of the participant’s immediate family. The exercise price of all stock options and stock appreciation rights granted under the 2006 Plan must be at least equal to 100% of the fair market value of the ordinary share on the date of grant (or at least 110% of such fair market value for an incentive stock option, or (“ISO”), granted to a shareholder with greater than 10% voting power of the Company’s stock). The maximum term of a stock option granted to any participant must not exceed seven years from the date of grant or five years for an ISO granted to a shareholder with greater than 10% of the voting power of the ordinary share. The Administrator will determine the terms and conditions of all other Awards granted under the 2006 Plan. Stock Award and Stock Option Activity During 2016, the Company granted equity awards primarily consisting of restricted stock, restricted stock units, stock options and performance shares. Such awards generally vest over a period of one to four years from the vesting start date. Restricted stock has the voting rights of ordinary shares and the shares underlying restricted stock are issued and outstanding. As of December 31, 2015, the number of ordinary shares available for issuance pursuant to future grants under the 2006 plan, including remaining unissued shares under Prior Plans that have been transferred into the 2006 plan were 1,022,114. The 2006 Plan expired on December 31, 2016, and 960,940 shares were transferred to the 2017 Plan that was approved by the Board of Director on November 4, 2016. Therefore, as of December 31, 2016, the number of ordinary shares available for issuance was 2,960,940 under the 2017 Plan. The following table summarizes the Company’s stock option activities: Number of Weighted shares average outstanding exercise price (in thousands) Options Outstanding, December 31, 2014 $ Options Granted — — Options Exercised ) Options Forfeited or Expired ) Options Outstanding, December 31, 2015 $ Options Granted Options Exercised — — Options Forfeited or Expired ) Options Outstanding, December 31, 2016 $ Under the 2006 Plans, the Company granted restricted stock awards. Restricted stock awards are unvested stock awards that may include grants of restricted stock or grants of restricted stock units. Such awards generally vest over a period of one to four years from the date of grant. Restricted stock has the voting rights of ordinary share and the shares underlying restricted stock are considered to be currently issued and outstanding. Restricted stock units do not have the voting rights of ordinary shares, and the shares underlying the restricted stock units are not considered issued and outstanding. The expense for such awards is based on the fair market value of the shares at the date of grant and is recognized on a straight-line basis over the requisite service period. The grant of restricted stock awards is deducted from the shares available on a one to one basis for grant under the Company’s stock plan. Unvested restricted awards as of December 31, 2016 and changes during the year ended December 31, 2016 and 2015 are summarized below: Weighted average grant date Shares fair value (in thousands) Total nonvested restricted stock at December 31, 2014 $ Granted $ Vested ) $ Forfeited ) $ Total nonvested restricted stock at December 31, 2015 $ Granted $ Vested ) $ Forfeited ) $ Total nonvested restricted stock at December 31, 2016 $ During the year ended December 31, 2015, 0.4 million shares of restricted stock awards vested. The total fair value of restricted stock awards vested, as measured on the date of vesting, during the year ended December 31, 2015 was $1.3 million. The Company also granted 0.4 million restricted stock awards. During the year ended December 31, 2016, 0.6 million shares of restricted stock awards vested. The total fair value of restricted stock awards vested, as measured on the date of vesting, during the year ended December 31, 2016 was $1.7 million. The Company also granted 1.1million restricted stock awards. The intrinsic value represents the total pre-tax intrinsic value and is calculated as the difference between the market value as reported by NASDAQ on December 30, 2016 of $2.0 and the exercise price of the in-the-money shares. During the years ended December 31, 2016 and 2015, the total pre-tax intrinsic value of options exercised was negligible. The weighted average remaining contractual life of options exercisable was 2.13 years, and the weighted average remaining contractual life of options expected to vest was 4.45 years as of December 31, 2016. Stock-Based Compensation Stock-based compensation expense for stock options is estimated at the grant date based on each option’s fair value as calculated by the Black-Scholes model. The Black-Scholes model was developed for use in estimating the fair value of short-lived exchange traded options that have no vesting restrictions and are fully transferable. In addition, option pricing models require the input of highly subjective assumptions, including the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. The Company uses historical volatility as management believes it is more representative of future stock price trends than implied volatility due to the relatively small number of actively traded options on the Company’s ordinary shares available to determine implied volatility. The Company estimates an expected term of options granted based upon the Company’s historical exercise and cancellation data for vested options. In addition, separate groups of employees that have similar exercise behavior are considered separately. The expected term of employee stock purchase plan shares is the average of the remaining purchase periods under each offering period. The Company bases the risk free interest rate used in the option valuation model on U.S. Treasury zero-coupon issues with remaining terms similar to the expected term on the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore uses an expected dividend yield of zero in the option valuation model. The Company is required to estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. The Company uses historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that are expected to vest. The fair values of stock-based payment awards excluding non-employee, were estimated using the Black-Scholes option pricing model with the following assumptions: Years ended December 31, Stock Options: 2016 2015 Expected term in years Weighted average risk-free interest rate % % Expected dividend rate % % Volatility % % At December 31, 2017, there was approximately $0.8 million of total unrecognized compensation cost, as measured, related to unvested stock options and restricted stock and restricted stock units, which is expected to be recognized over a weighted-average period of 1.23 years. At December 31, 2016, there was approximately $1.8 million of total unrecognized compensation cost, as measured, related to unvested stock options and restricted stock and restricted stock units, which is expected to be recognized over a weighted-average period of 1.87 years. The following table summarizes the stock-based compensation expense recognized in the Company’s Consolidated Statement of Operations: Years ended December 31, 2017 2016 2015 (in thousands) Cost of net sales $ $ $ Selling, general and administrative Research and development Total $ $ $ |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
INCOME TAXES | NOTE 10—INCOME TAXES Cayman Islands Under the current tax laws of Cayman Islands, the Company and its subsidiaries are not subject to tax on their income or capital gains. In addition, upon of dividends by the Company to its shareholders, no Cayman Islands withholding tax will be imposed. United States and Foreign Income Taxes United States and foreign income (loss) before income taxes and minority interest were as follows: Years Ended December 31, 2017 2016 2015 (in thousands) United States $ ) $ $ Foreign ) ) $ $ $ ) The components of the provision (benefit) for income taxes are as follows: Years Ended December 31, 2017 2016 2015 (in thousands) Current Federal $ — $ — $ — State — — — Foreign $ $ ) Total Current $ $ $ ) Deferred Federal — — — State — — — Foreign ) Total Deferred ) Total $ $ $ ) On December 22, 2017, the Tax Act was enacted. The Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate income tax rate (“federal tax rate”) from 35% to 21% effective January 1, 2018, implementing a modified territorial tax system, and imposing a mandatory one-time transition tax on accumulated earnings of foreign subsidiaries. The 21% federal tax rate will apply to the Company’s calendar year ending December 31, 2018 and each year thereafter. The Company must remeasure its deferred tax assets and liabilities (“DTA”) using the federal tax rate that will apply when the related temporary differences are expected to reverse. The Company has $0 deemed repatriation tax liability because its foreign subsidiaries’ accumulated earnings and profits was negative as of both November 2, 2017 and December 31, 2017. As of December 31, 2017, the Company had gross unrecognized tax benefits of approximately $18.7 million and had certain deferred tax assets and the federal tax benefit of state income tax items totaling $16.7 million. Of the total $18.7 million gross unrecognized tax benefits, $2.0 million related to tax benefits that, if recognized, would impact the annual effective tax rate. The Company has reduced its unrecognized tax benefits by approximately $1.4 million during 2017 mainly due to statute of limitations expirations. The Company’s policy is to recognize interest expense and penalties related to the above unrecognized tax benefits as a component of income tax expense. The Company had accrued interest and penalties of approximately $0.4 million as of December 31, 2017 and approximately $0.4 million as of December 31, 2016. The Company is subject to taxation in the U.S. federal jurisdiction and various U.S. state and foreign jurisdictions. The Company is also under audit by the taxing authorities in China on a recurring basis. The material jurisdictions that the Company is subject to examination are in the United States and China. The Company’s tax years for 2006 through 2017 are still open for examination in China. The Company’s tax years for 2009 through 2017 are still open for examination in the United States. FASB ASC 740-10 establishes criteria for recognizing or continuing to recognize only more-likely-than-not tax positions, which may result in income tax expense volatility in future periods. While the Company believes that it has adequately provided for all tax positions, amounts asserted by taxing authorities could be greater than the Company’s accrued position. Accordingly, additional provisions on income tax related matters could be recorded in the future as revised estimates are made or the underlying matters are settled or otherwise resolved. A summary of the Company’s unrecognized tax benefits is as follows: Years Ended December 31, 2017 2016 2015 (in thousands) Beginning balance-gross unrecognized tax benefits (UTB’s) $ $ $ Additions based on tax positions related to the current year — — Reductions for tax positions related to prior years — — ) Lapse of statute of limitations ) ) ) Ending balance—gross unrecognized tax benefits (“UTB”s) UTB’s as a credit in deferred taxes ) ) ) Federal benefit of state taxes ) ) ) UTB’s that would impact the effective tax rate $ $ $ In establishing its deferred income tax assets and liabilities, the Company makes judgments and interpretations based on the enacted tax laws and published tax guidance applicable to its operations. The Company records deferred tax assets and liabilities and evaluates the need for valuation allowances to reduce the deferred tax assets to realizable amounts. The likelihood of a material change in the Company’s expected realization of these assets is dependent on future taxable income and its ability to use foreign tax credit carryforwards and carrybacks. A summary of the components of net deferred tax assets is as follows: December 31, December 31, (in thousands) Deferred Tax Assets Allowances and reserves $ ) $ ) Net operating loss carryforwards Tax credit carryforwards Writedown/amortization of intangible assets and goodwill Fixed assets Demo equipment income Other Total Deferred Tax Assets Deferred Tax Liabilities Prepaid expense ) Accrued warranties ) Other ) ) Total Deferred Tax Liabilities Total Net Deferred Tax Assets $ $ Less: Valuation Allowance $ ) $ ) Total Net Deferred Tax Assets As of December 31, 2017, the Company’s U.S. federal net operating loss carryforwards were $570.3 million and expire in varying amounts between 2025 and 2034. As of December 31, 2017, state net operating loss carryforwards were $292 million and expire in varying amounts between 2018 and 2038. The Company has concluded that these federal and state net operating losses did not meet the more likely than not standard contained in FASB ASC 740-10 and has therefore placed a $140.2 million valuation allowance against the related deferred tax assets. In the event the tax benefits related to the valuation allowance are realized, an immaterial amount would be credited to paid-in capital. As of December 31, 2017, the Company also had net operating loss carryforwards (“NOLs”) in China of approximately $55.7million. The China NOLs will expire in varying amounts between 2018 and 2022. The Company has also concluded that these China net operating losses did not meet the more likely than not standard and has therefore provided a $8.3 million valuation allowance against the related deferred tax assets. As of December 31, 2017, the Company had NOLs in countries other than the U.S. and China. These NOLs are approximately $102.8 million. The majority of the NOLs do not expire and can be carried forward indefinitely. However, the Company concluded majority of these losses did not meet the more likely than not standard and has therefore placed a valuation allowance of $17.7 million against the related deferred tax assets. As of December 31, 2017, the Company has U.S. alternative minimum tax credit carryforwards of $1.0 million which have an indefinite life. The Company also has U.S. research and development credit carryforwards of $8 million, $2.5 million of the credits have an indefinite life and $5.5 million of the credits expire in varying amounts between 2018 and 2032. The Company has U.S. foreign tax credits of $51.8 million which expire in varying amounts between 2018 and 2027. The Company has concluded that these U.S. tax credit carryforwards did not meet the more likely than not standard contained in FASB ASC 740-10 and has therefore provided a $60.8 million valuation allowance against the related deferred tax assets. The difference between the Company’s effective income tax amount and the federal statutory amount are reconciled below: Years Ended December 31, 2017 2016 2015 (in thousands) Federal tax (benefit) at statutory rate $ $ $ ) Stock compensation expense Effect of differences in foreign tax rates ) ) FIN48 reserve ) ) ) Change in deferred tax valuation allowance ) Other Total Tax Expense $ $ $ ) On June 24, 2011, the Company effected the Merger to reorganize the corporate structure of UTStarcom, Inc., a Delaware corporation incorporated in 1991, and its subsidiaries. The Merger resulted in shares of the common stock of UTStarcom, Inc. being converted into the right to receive an equal number of ordinary shares in our capital, which were issued by us in connection with the Merger. Following the Merger, UTStarcom, Inc. became our wholly-owned subsidiary and the Company became the parent company of UTStarcom, Inc. and its subsidiaries. The Company, together with its subsidiaries, continues to conduct its business in substantially the same manner as was conducted by UTStarcom, Inc. and its subsidiaries. The transaction was accounted for as a legal re-organization of entities under common control. The Company remains subject to U.S. taxes at a statutory rate of 35%. The China Corporate Income Tax Law (“CIT Law”) became effective on January 1, 2008. Under the CIT Law, China’s dual tax system for domestic enterprises and foreign investment enterprises (“FIEs”) was effectively replaced by a unified system. The new law establishes a tax rate of 25% for most enterprises and a reduced tax rate of 15% for certain qualified high technology enterprises. The CIT Law provides the reduced 15% enterprise income tax rate for qualified high and new technology enterprises. One of the Company’s China subsidiaries, HUTS, through which the majority of our business in China is conducted obtained the High and New Technology Enterprise Certificate, or (“High-tech Certificate”), from the relevant approval authorities on September 19, 2008, and thereafter were approved to pay CIT at the reduced tax rate of 15%. The approval for the reduced 15% tax rate is valid for three years and applies retroactively from January 1, 2008, subject to possible re-assessment by the approval authorities. During the re-assessment, the tax authority may suspend the implementation of the reduced 15% rate. HUTS’s High-tech Certificate renewal was approved on November 13, 2017. HUT’s approval extended the reduced 15% tax rate terms for three years . However, since HUTS is currently in significant loss position, the reduced in tax rate will not have a material adverse impact on the business or liquidity until HUTS begin to generate profit and deplete all the net operating loss carry forwards. As of September 30, 2005, the Company did not believe it was more likely than not that it would generate a sufficient level and proper mix of taxable income within the appropriate period to utilize all the deferred tax assets in China and the United States. As a result of the review undertaken at September 30, 2005, the Company has concluded that it was appropriate to establish a full valuation allowance for the net deferred tax assets in China and the United States wherein the cumulative losses weigh heavily in the overall assessment. The Company has continued to provide full valuation allowances since 2005 as it did not believe it was more likely than not that it would generate sufficient taxable income within the appropriate period to utilize those deferred tax assets. In 2017, the change in deferred tax valuation allowance of $6.0 million is primarily attributable to the tax expense related to continuing to provide full valuation allowance on the Company’s deferred tax assets at December 31, 2017 in the United States and China. In 2016, the change in deferred tax valuation allowance of $3.0 million is primarily attributable to the tax expense related to continuing to provide full valuation allowance on the Company’s deferred tax assets at December 31, 2016 in the United States and China. In 2015, the change in deferred tax valuation allowance of $14 million is primarily attributable to the tax expense related to continuing to provide a full valuation allowance on the Company’s deferred tax assets at December 31, 2015 in the United States and China. In 2017, 2016, and 2015, there was no income tax benefit related to tax credits. |
OTHER INCOME, NET
OTHER INCOME, NET | 12 Months Ended |
Dec. 31, 2017 | |
OTHER INCOME, NET | |
OTHER INCOME, NET | NOTE 11-OTHER INCOME, NET Other income, net consists of the following: Years ended December 31, 2017 2016 2015 (in thousands) Foreign exchange gains (loss) $ $ $ ) Gain from the currency translation adjustment — Tax reversal for expiration of the statute of limitations (1) — — ESA loan impairment (2) — — ESA loan interest (2) — — Realized investment gain (3) — UiTV loan impairment (4) — — ) Other Total $ $ $ (1) Previously, when the Company divested its Korean subsidiary, the Company provided a tax reserve as it offered indemnification to the buyer for the uncertain tax position arising in the periods before the divestiture. In 2016, approximately $0.8 million of such tax reserve was released due to expiration of statute of limitations. (2) The Company signed the loan agreement to for a total amount of $5.6 million in 2012. In the third quarter of 2015, the Company received $6.0 million, including $1.1 million interest income. Accordingly, $2.8 million reserve was reversed and recorded in Other income (expense), net. Therefore, all principal of the outstanding entrusted loan was collected and the contract was closed. (3) The Company received 124,395 shares of Inphi on November 14, 2014 to exchange for the 1% interest in Cortina. Management assessed the shares and classified them as available-for-sale securities and subject to fair value accounting. In the first quarter of 2015, the Company sold the 124,395 shares of Inphi stock for a total cash consideration of $2.4 million, which resulted in a realized gain of $0.6 million in Other Income. In the second quarter of 2015, the Company also received $0.7 million in cash proceeds in connection with the sale of assets that had a $0 net carrying value, resulting in a realized gain in Other Income. In the fourth quarter of 2015, another $0.3 million was released from escrow deposited by Inphi during the transaction and the Company recorded as a realized gain in Other Income. In the second quarter of 2016, another $0.1million was released from escrow deposited by Inphi during the transaction and the Company recorded as a realized gain in Other Income. (4) The other receivable balance includes loans to UiTV of approximately $2.3 million as of December 31, 2015. UiTV used this amount to purchase Set Top Boxes for the Internet television service in Thailand. Pursuant to the contract, UiTV repays in installments, starting from January of 2015 to July of 2018. The Company has performed an assessment on the need for a valuation reserve due to collectability risk and $2.3 million was reserved as of December 31, 2015. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 12 Months Ended |
Dec. 31, 2017 | |
NET INCOME (LOSS) PER SHARE | |
NET INCOME (LOSS) PER SHARE | NOTE 12-NET INCOME (LOSS) PER SHARE The following table sets forth the computation of basic and diluted net loss per share for the years ended December 31, 2017, 2016 and 2015: Years Ended December 31, 2017 2016 2015 (in thousands) Numerator: Net income (loss) attributable to UTStarcom Holdings Corp. $ $ $ ) Denominator: Weighted average shares outstanding-Basic Potentially dilutive common stock equivalents-stock options and restricted stock — Weighted average shares outstanding-Diluted Net Income(loss) per share attributable to UTStarcom Holdings Corp.- Basic $ $ $ ) Net Income(loss) per share attributable to UTStarcom Holdings Corp.-Diluted $ $ $ ) The dilutive effect of share-based awards is reflected in diluted net loss per share by application of the treasury stock method, which includes consideration of unamortized share-based compensation expense and the dilutive effect of in-the-money options and unvested restricted stock units. Under the treasury stock method, the amount the employee must pay for exercising stock options and unamortized share-based compensation expense are assumed proceeds to be used to repurchase hypothetical shares. An increase in the fair market value of the Company’s ordinary share can result in a greater dilutive effect from potentially dilutive awards. For the year ended December 31, 2015, no potential ordinary shares were dilutive because of the net loss incurred in that year, therefore basic and dilutive EPS were the same. For the years ended December 31, 2016 and 2017, 1.4 million and 1.2 million potential ordinary shares were dilutive. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE 13-SEGMENT REPORTING The Company’s reporting segments are as follows: · Equipment-Focused on our equipment sales including network infrastructure and application products. Network infrastructure products mainly include broadband products. Network application products mainly include Wireless infrastructure technologies. · Services-Providing services and support for our equipment products and also the new operational support segment. The Company’s Chief Operating Decision Makers make financial decisions and resource allocations based on information they receive from their internal management system and currently evaluate the operating performance and allocates resources to the reporting segments based on segment revenue, gross profit and income (loss) before income taxes. Cost of sales and direct expenses in relation to production are assigned to the reporting segments. The accounting policies used in measuring segment assets and operating performance are the same as those used at the consolidated level. Summarized below are the Company’s segment net sales, gross profit and income (loss) before income taxes for the years ended December 31, 2017, 2016 and 2015 based on the current reporting segment structure. Years ended December 31, Net Sales by 2017 % of 2016 % of 2015 % of (in thousands, except percentages) Equipment $ % $ % $ % Services % % % Total Sales $ % $ % $ % Years ended December 31, Gross profit (loss) by 2017 Gross 2016 Gross 2015 Gross (in thousands, except percentages) Equipment $ % $ % $ % Services % % % Total Gross profit $ % $ % $ % Years ended December 31, Segment Margin and Income ( loss ) before income taxes 2017 2016 2015 (in thousands) Equipment $ $ $ Services Total Segment Margin General and Corporate ) ) ) Income (loss) before income taxes $ $ $ ) General and corporate expenses include all un-allocated expenses such as sales and marketing, general and administration and common R&D expenses, equity income (loss) of associates, investment impairment, etc. Sales are attributed to a geographical area based upon the location of the customer. Sales data by geographical area are as follows: Years Ended December 31, 2017 % of net 2016 % of net 2015 % of net (in thousands, except percentages) Net Sales by Region China $ % $ % $ % Japan % % % India % % % Taiwan % % % Other % % % Total $ % $ % $ % Long-lived assets, consisting of property, plant and equipment, by geographical area are as follows: December 31, 2017 2016 (in thousands) China $ $ Other Total long-lived assets $ $ |
CREDIT RISK AND CONCENTRATION
CREDIT RISK AND CONCENTRATION | 12 Months Ended |
Dec. 31, 2017 | |
CREDIT RISK AND CONCENTRATION | |
CREDIT RISK AND CONCENTRATION | NOTE 14-CREDIT RISK AND CONCENTRATION Financial Risks: Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, cash equivalents, short-term investments and accounts and notes receivable. The Company places its temporary cash and short-term investments with several financial institutions. Approximately $46.0 million and $53.8 million of the Company’s cash and cash equivalents and short-term investments were on deposit in accounts outside the U.S. at December 31, 2017 and 2016, respectively, of which approximately $7.9 million and $13.5 million were held by subsidiaries in China. The Company’s exposure to market risk for changes in interest rates relates primarily to its investment portfolio. The fair value of its investment portfolio would not be significantly affected by either a 10% increase or decrease in interest rates due mainly to the short-term nature of most of its investment portfolio with the exception of the available-for-sale securities. The investment classified as available-for-sales securities is reported at fair value. It will be measured subsequently at fair value on the balance sheets with unrealized gains and losses will be recorded in accumulated other comprehensive income (loss) in shareholders’ equity. Any negative events or deterioration in financial well-being with respect to the counterparties of the long-term investments and the underlying collateral may cause material losses to the Company and have a material effect on the Company’s financial condition and results of operations. In addition, the Company’s interest income can be sensitive to changes in the general level of U.S. and China interest rates since the majority of its funds are invested in instruments with maturities of less than one year. In a declining interest rate environment, as short-term investments mature, reinvestment occurs at less favorable market rates. Given the short-term nature of certain investments, declining interest rates will not negatively impact the Company’s investment income. The Company maintains an investment portfolio of various holdings, types and maturities. The Company does not use derivative financial instruments. The Company places its cash investments in instruments that meet high credit quality standards, as specified in its investment policy guidelines. The Company’s policy is to limit the risk of principal loss and to ensure the safety of invested funds by generally attempting to limit market risk. The Company’s available-for-sale securities are reported at fair value, with unrealized gains and losses recorded in accumulated other comprehensive loss in shareholders’ equity. Any negative events or deterioration in financial well-being with respect to the counterparties of these investments may cause material losses to the Company and have a material effect on the Company’s financial condition and results of operations. Concentration of Credit Risk and Major Customers: At December 31, 2017 and 2016, the Company’s accounts receivable balance included amounts due from Softbank and its affiliates, representing approximately 2% and 57% of the Company’s total accounts receivable, net of allowances for doubtful accounts, respectively. The following customers accounted for 10% or more of the Company’s net revenues: For the years ended 2017 2016 2015 Softbank and affiliates % % % Bharat Sanchar Nigam Ltd. and affiliates % % % Country Risks: Approximately 3%, 5% and 8% of the Company’s sales for the year ended December 31, 2017, 2016, and 2015, respectively, were from China. Accordingly, the political, economic and legal environment, as well as the general state of China’s economy may influence the Company’s business, financial condition and results of operations. The Company’s operations in China are subject to special considerations and significant risks not typically associated with companies in the United States. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by, among other things, changes in the political, economic and social conditions in China, and by changes in governmental policies with respect to laws and regulations, changes in China’s telecommunications industry and regulatory rules and policies, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation. In addition, the major customers of the Company are Japan-based customers and India-based customers. Therefore, our results of operations may be adversely affected by the political and business relationship between as well as other events affecting Japan or India in general. From time to time there have been tensions and conflicts among China, Japan and India. Adverse changes in political and economic policies, geopolitical uncertainties, and international conflicts may lead to a reduction in our sales. Any future conflicts among China, Japan and India have an adverse impact on the political and business relationship of the countries. Furthermore, events affecting Japan or India in general, such as natural disasters, or a local currency devaluation may also have a negative impact on our business, financial condition and results of operations. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 15-RELATED PARTY TRANSACTIONS In 2016, the Company paid $0.2 million to Tim Ti, the Chief Executive Officer of the Company, for remuneration for service to Virtual Gateway Labs, Inc.. These amounts were expensed as employee compensation. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 16-SUBSEQUENT EVENTS On March 28, 2018, the Company became a shareholder of Hangzhou uSTAR Technologies Limited ,or (“uSTAR”), a newly established JV Company, UT owns 49% equity interest of uSTAR and will make capital injection of $2.2 million subsequently. uSTAR will offer individual ‘smart appliances’ that further capitalize on our IT expertise while expanding the market opportunity. In addition to the development of smart refrigerators, uSTAR will provide a comprehensive retail automation solution for the fast-growing Chinese smart retail store market. The product line includes smart shopping machines with hardware and software support. Smart retail solutions are expected to enhance the customer experience and save operating costs. The product utilizes integrated technologies such as facial recognition, image analysis, behavior identification, load sensor, RFID, and mobile payment. Moreover, the cloud-based operations center will offer various types of value-added services, enabling the real-time interaction of people, products and localities. |
SCHEDULE I CONDENSED FINANCIAL
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT | 12 Months Ended |
Dec. 31, 2017 | |
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT | |
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT | SCHEDULE I UTSTARCOM HOLDINGS CORP. (UNCONSOLIDATED-PARENT COMPANY BASIS) REGISTRANT BALANCE SHEETS (In thousands, except par value) December 31, 2017 2016 (in thousands) ASSETS Investment in subsidiaries $ $ Total assets LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable-intercompany Total current liabilities Total liabilities Stockholders’ equity: Ordinary shares: $0.00375 par value; 250,000 authorized shares; 39,363 and 39,009 shares issued at December 31, 2017 and December 31, 2016, respectively; 35,506 and 35,225 shares outstanding at December 31, 2017 and December 31, 2016, respectively Additional paid-in capital Treasury stock, at cost: 3,857 and 3,784 shares at December 31, 2017 and December 31, 2016, respectively ) ) Accumulated deficit ) ) Accumulated other comprehensive income Total stockholders’ equity Total liabilities and stockholders’ equity $ $ The accompanying notes are an integral part of these consolidated financial statements. UTSTARCOM HOLDINGS CORP. (UNCONSOLIDATED-PARENT COMPANY BASIS) CONDENSED INFORMATION AS TO THE RESULTS OF OPERATIONS OF THE REGISTRANT (In thousands) Years ended December 31, 2017 2016 2015 (in thousands) Sales Unrelated parties $ — $ — $ — Related parties — — — Intercompany — — — Cost of sales Unrelated parties — — — Related parties — — — Intercompany — — — Gross profit — — — Operating expenses: Selling, general and administrative Research and development — — — Total operating expenses Operating loss ) ) ) Interest income — — — Interest expense — — — Other income, net — — — Loss before income taxes and equity in loss of affiliated companies ) ) ) Equity in net income (loss) of affiliated companies ) Income tax benefit (expense) — — — Net income (loss) and comprehensive income (loss) $ $ $ ) The accompanying notes are an integral part of these financial statement UTSTARCOM HOLDINGS CORP. NOTES TO CONDENSED FINANCIAL STATEMENTS NOTE 1-BASIS OF PRESENTATION UTStarcom Holdings Corp., or the Company, a Cayman Island corporation, is the parent company of all UTStarcom Holdings Corp. subsidiaries. The condensed financial statements of the Company have been prepared pursuant to the rules and regulations of the SEC and in conformity with U.S. GAAP. The Company determined cash flow activities during the period were not material and therefore omitted the statement of cash flows from these financial statements. On June 24, 2011, the Company effected a merger, or the Merger, to reorganize the corporate structure of UTStarcom, Inc., a Delaware corporation incorporated in 1991, and its subsidiaries. As a result of the reorganization, UTStarcom Holdings Corp. became the parent company of UTStarcom, Inc. and its subsidiaries. Pursuant to the Merger, the Company issued an equal number of ordinary shares in exchange for the common stock of UTStarcom, Inc. Given the reorganization of the corporate structure on June 24, 2011, the prior period numbers have been adjusted as if the new corporate structure had been in place since the beginning of the earliest period presented in the above condensed financial statements. The Company is generally a holding company of certain subsidiaries, or collectively subsidiaries. The condensed financial statements of the Company have been prepared with the assumption that the current corporate structure has been in existence throughout all relevant periods. The Company records its investment in subsidiaries under the equity method of accounting as prescribed in ASC 323-10, “ The Equity Method of Accounting for Investments in Common Stock. ” Such investment is presented on the balance sheet as “Investment in affiliated companies” and the subsidiaries’ profit or loss are recognized based on the effective shareholding percentage as “Equity in net income (loss) of affiliated companies” on the results of operations. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The footnote disclosures contain supplemental information relating to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the consolidated financial statements of the Company. The Company is a shell company and does not have any activities. Operating expenses for the Company for the years ended December 31, 2017, 2016 and 2015 consisted mainly of the retaining fee for the Board of Directors, its director and officer insurance expenses and the expenses associated with investor relations. As the Company does not have any cash activity, the recorded expenses were paid on behalf of the Company by UTStarcom, Inc., its subsidiary, and statements of cash flows have been omitted. |
SCHEDULE II VALUATION AND QUALI
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | 12 Months Ended |
Dec. 31, 2017 | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | |
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES | SCHEDULE II UTSTARCOM HOLDINGS CORP. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES For the Years Ended December 31, 2017, 2016, and 2015 Description Balance at Charged Credited to (Deductions) (1) Balance at Year ended December 31, 2017 Allowance for doubtful accounts $ $ ) $ $ — $ Tax valuation allowance $ $ $ — $ ) $ Year ended December 31, 2016 Allowance for doubtful accounts $ $ $ — $ ) $ Tax valuation allowance $ $ ) $ $ — $ Year ended December 31, 2015 Allowance for doubtful accounts $ $ $ — $ ) $ Tax valuation allowance $ $ ) $ ) (2) $ — $ (1) Represents write-offs of allowance for doubtful accounts and foreign exchange adjustments. (2) Includes $3 million removal of tax valuation allowance for expiration of net operating loss carryforwards in China and $27 million for utilization of foreign tax credits in US. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Use of Estimates: | Use of Estimates: The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant judgment and estimates are used for revenue recognition, allowances for doubtful accounts and sales returns, tax valuation allowances, inventory write-down, impairment of property, plant and equipment, deferred costs, accrued product warranty costs, provisions for contract losses, investment impairments, going concern assessment, stock-based compensation expense, and loss contingencies among others. Actual results could differ materially from those estimates. |
Cash and Cash Equivalents: | Cash and Cash Equivalents: Cash and cash equivalents consist of highly liquid instruments with maturities of three months or less when acquired. Approximately 46.3%, or $36.9 million of cash and cash equivalents were held by the Company’s subsidiaries in the United States as of December 31, 2017. The remainder was held by the other UTStarcom entities throughout the world. As of December 31, 2017, approximately 9.9%, or $7.9 million, of the Company’s cash and cash equivalents were held by its subsidiaries in China, and China imposes currency exchange controls on transfers of funds outside of China. |
Restricted Cash: | Restricted Cash: As of December 31, 2017, the Company had short-term restricted cash of $12.1 million, and had long-term restricted cash of $8.8 million. As of December 31, 2016, the Company had short-term restricted cash of $11.4 million, and had long-term restricted cash of $3.3 million. These amounts primarily collateralize the Company’s issuances of performance bonds, warranty bonds, and standby and commercial letters of credit. |
Investments: | Investments: The Company’s investments consist principally of debt and equity securities classified as “available for sale,” and cost and equity method investments in privately held companies. The investments in equity securities of privately held companies in which the Company does not have the ability to exercise significant influence are accounted for under ASC 325, “ Investments-Other ” using the cost method. Under the cost method, these investments are carried at cost minus impairment. The investments in equity securities of privately held companies in which the Company has the ability to exercise significant influence, but does not own a majority equity interest or otherwise control are accounted for under ASC 323, “ Investments-Equity Method and Joint Ventures ” using the equity method. Investments in debt securities classified as available for sale are measured at fair value on the balance sheets under ASC 320, “ Investments-Debt and Equity Securities. ” Unrealized holding gains and losses for available-for-sale securities (including those classified as current assets) are excluded from earnings and reported in other comprehensive income until realized except as indicated in the following paragraph. The Company recognizes an impairment charge when a decline in the fair value of its investments below the cost basis is judged to be other-than-temporary. The Company reviews several factors to determine whether the losses are other-than-temporary, including but not limited to: (i) the length of time the investment was in an unrealized loss position, (ii) the extent to which fair value was less than cost, (iii) the financial condition and near term prospects of the issuer, and (iv) the Company’s intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in fair value. The determination of fair value of the investment involves considering factors such as current economic and market conditions, the operating performance of the companies including current earnings trends and forecasted cash flows, and other company and industry specific information. Investment impairments recorded as other-than-temporary were $1.7 million, $5.3 million, and $16.3 million, for the years ended December 31, 2017, 2016 and 2015, respectively. |
Revenue Recognition: | Revenue Recognition: The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectability is reasonable assured. Most of the Company’s multiple element arrangements primarily involve the sale of hardware systems, installation and training. In addition, while not separately sold, the arrangement may include extended warranties that cover product repairs, maintenance services, and software updates for the software components that are essential to the functionality of the hardware systems or equipment. For multiple-element arrangements, the Company allocates revenue to each unit of accounting based on an estimated selling price at the arrangement inception. The estimated selling price for each element is based upon the following hierarchy: i) Vendor-specific objective evidence (“VSOE”) of selling price, if available, ii) Third-party evidence (“TPE”) of selling price, if VSOE of selling price is not available, or iii) Best estimate of selling price (“BESP”), if neither VSOE of selling price nor TPE of selling price are available. The Company establishes VSOE of selling price using the price charged for a deliverable when sold separately. When the Company is unable to establish selling price using VSOE, the Company uses BESP in the allocation of arrangement consideration. The objective of BESP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The Company’s management applies judgment in establishing pricing strategies and determines its BESP for a product or service using historical selling price trends and by considering multiple factors including, but not limited to, cost of products, gross margin objectives, geographies, customer classes, customer segment pricing practices and distribution channels. The determination of BESP is performed through consultation with its product management and marketing department and includes review and approval by our management. The Company’s management regularly reviews VSOE and BESP and maintain internal controls over the establishment and updates of these estimates. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” (“ASU 2014-09”). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 supersedes most existing US GAAP on revenue recognition and eliminate industry-specific guidance. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date (“ASU 2015-14”), which defers the effective date of ASU 2014-09 to January 1, 2018 for the Company. Early adoption is permitted. The Company adopts ASU 2014-09 using the modified retrospective method in the first quarter of 2018. The Company has completed a detailed review of revenue contracts representative of its business segments and their revenue streams as of the adoption date. The Company is established new accounting policies, implementing systems and processes (including more extensive use of estimates), and internal controls necessary to support the requirements of the new standard. Upon adoption, the Company expects a material impact to the opening balance sheet as of January 1, 2018, related to the cumulative effect of adopting the standard, primarily as a result of the item discussed below: Some of the Company’s contracts included final acceptance provisions or other price variability that precluded revenue recognition under Topic 605 due to the requirement that the revenue amount must be fixed or determinable. Topic 606 requires the Company to estimate and account for variable consideration as a reduction of the transaction price separately and not part of the revenue recognition consideration. This changes resulted in $7.4 million cumulative increase which is the combination of the Company’s unearned revenue $14.4 million and related deferred cost $7.0 million to the Company’s retained earnings as of January 1, 2018. |
Product Warranty: | Product Warranty: The Company provides a warranty on its equipment and terminal sales for periods generally ranging from one to two years from the time of final acceptance. At times, the Company has entered into arrangements to provide limited warranty services for periods longer than two years. The Company provides for the expected cost of product warranties at the time that revenue is recognized based on an assessment of past warranty experience and when specific circumstances dictate. The Company assesses the adequacy of its recorded warranty liability every quarter and makes adjustments to the liabilities if necessary. From time to time, the Company may be subject to additional costs related to non-standard warranty claims from its customers. If and when this occurs, the Company estimates additional accruals based on historical experience, communication with its customers and various assumptions that the Company believes to be reasonable under the circumstances. Such additional warranty accruals are recorded in the period in which the additional costs are identified. Specific warranty accruals are reversed upon the expiration of the warranty period and are recorded as reduction of cost of sales. |
Receivables: | Receivables: Although the Company evaluates customer credit worthiness prior to a sale, the Company provides an allowance for doubtful accounts for the estimated loss on trade when collection may no longer be reasonably assured. The Company assesses collectability of receivables based on a number of factors including analysis of creditworthiness, the Company’s historical collection history and current economic conditions, its ability to collect payment and on the length of time an individual receivable balance is outstanding. The Company’s policy for determining the allowance for doubtful accounts includes both specific allowances for balances known to be doubtful of recovery and a formula-based portfolio approach, based on aging of the accounts receivable, as a part of management’s review of the overall allowance for doubtful accounts. This formula-based approach involves aging of the Company’s accounts receivable and applying a percentage based on the Company’s historical experience. The Company evaluates the percentages applied to each category of aged accounts receivable periodically based on actual history of write-offs and collections and refines this formula-based approach accordingly for use in future periods. Receivable balances are written-off when the Company has sufficient evidence to prove that they are uncollectible. |
Inventories: | Inventories: Inventories consist of product held at the Company’s manufacturing facility and warehouses, as well as finished goods at customer sites for which the customer has taken possession, but based on specific contractual terms, title has not yet passed to the customer. The Company may ship inventory to existing customers that require additional equipment to expand their existing networks prior to the signing of an expansion contract. Inventories are stated at the lower of cost or market value, based on the first-in-first-out (“FIFO”) method of accounting. Write-downs are based on assumptions about future market conditions and customer demand, including projected changes in average selling prices resulting from competitive pricing pressures. The Company continually monitors inventory valuation for potential losses and obsolete inventory at its manufacturing facilities as well as at customer sites. If actual market conditions are less favorable than those projected by management, additional write-downs may be required. If actual market conditions are more favorable than anticipated, the previously written down inventory may be sold to customers and result in lower cost of sales and higher income from operations than expected in that period. |
Deferred Costs: | Deferred Costs: Deferred costs consist of products shipped to the customer, but revenue has not yet been recognized due to revenue recognition criteria not fully met. Given that there is uncertainty about customer acceptance until the customer completes its internal testing and procedures, we defer the recognition of costs until the issuance of the final acceptance certificate to support its assertion of contract fulfillments. Management periodically assesses the recoverability of deferred costs and provides reserves against deferred cost balances when recovery of deferred costs is not probable. Recoverability is evaluated based on various factors including the length of time the product has been held at the customer site, the likelihood of collection, or it is determined that a related transaction will result in a gross margin loss. When a loss situation is identified, the deferred cost balance is impaired to reduce the value of the deferred cost to the amount of revenue that will be ultimately recognized for the transaction. Revenue and cost of sales are recorded when final acceptance is received from the customer. |
Property, Plant and Equipment: | Property, Plant and Equipment: Property, plant and equipment are recorded at cost and are stated net of accumulated depreciation. Depreciation is provided for on a straight-line basis over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the estimated useful lives or the term of the lease. When assets are disposed, the cost and related accumulated depreciation are removed from the accounts and the resulting gains or losses are included in results of operations. The Company generally depreciates its property, plant and equipment over the following periods: Years Equipment and furniture 5 Computers and software 2 - 3 Automobiles 5 Leasehold improvements Lesser of the lease term or estimated useful life Depreciation expense was $0.6 million, $1.2 million, and $2.3 million, for the years ended December 31, 2017, 2016 and 2015, respectively. |
Impairment of Long-Lived Assets: | Impairment of Long-Lived Assets: Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If undiscounted expected future cash flows are less than the carrying value of the assets, an impairment loss is recognized based on the excess of the carrying amount over the fair value of the assets. Long-lived assets that are to be sold are measured at the lower of book value or fair value less cost to sell. |
Advances: | Advances: Advances from customers represent cash received from customers before revenue recognition for the purchase of the Company’s products. |
Advertising Costs: | Advertising Costs: The Company expenses all advertising costs as incurred. Payment to customers for marketing development costs are accounted for as incurred as a reduction of the revenue associated with customers. For the years ended December 31, 2017, 2016 and 2015, advertising costs totaled $0.1 million, $0.1 million, and $0.1 million, respectively. |
Operating Leases: | Operating Leases: The Company leases office space under operating lease agreements with an initial lease terms up to five years. Rental expense is recognized from the date of initial possession of the leased property on a straight-line basis over the term of the lease. |
Stock-Based Compensation: | Stock-Based Compensation: Stock-based compensation expense for all share-based payment awards granted to employees is determined based on the grant-date fair value. Stock-based compensation expense for restricted stock awards is measured based on the closing fair market value of the Company’s ordinary shares on the date of grant. Stock-based compensation expense for stock options is estimated at the grant date based on each option’s fair value as calculated by the Black-Scholes model. Stock-based compensation is expensed ratably on a straight-line basis over the requisite service period, which is generally the vesting term of the share-based payment awards. The performance-based restricted stock units are subject to the attainment of goals determined by the Compensation Committee of the Company’s Board of Directors. The Company records the relevant stock-based compensation for the performance-based restricted stock units based on the probability of meeting the performance conditions. |
Accumulated Other Comprehensive Income (AOCI): | Accumulated Other Comprehensive Income (“AOCI”): AOCI mainly consisted of foreign currency translation adjustments and the unrealized gain or loss from available-for-sale investments. The changes in AOCI, including the amounts reclassified to income, were as follows: Foreign currency (in thousands) Balance at December 31, 2015 $ Gain recorded in other comprehensive income Gain reclassified from AOCI to income ) Balance at December 31, 2016 $ Gain recorded in other comprehensive income Gain reclassified from AOCI to income ) Balance at December 31, 2017 $ As of December 31, 2017, no accumulated other comprehensive income or loss is attributable to non-controlling interests. The Company reclassifies foreign currency translation adjustments from AOCI to income upon sale or upon complete or substantially complete liquidation of investments in foreign entities, when the amounts attributable to the entities and accumulated in the translation adjustment component of equity is both: (a) removed from the separate component of equity; and (b) reported as part of the gain or loss on sale or liquidation of the investment for the period during which the sale or liquidation occurs. During fiscal 2016, the Company recognized and reclassified $0.1 million to net income from cumulative translation adjustment previously recorded in accumulated to other comprehensive income upon the liquidation of two entities. During fiscal 2017, the Company recognized and reclassified $1.7 million to net income from cumulative translation adjustment previously recorded in accumulated other comprehensive income upon the liquidation of one entity. The prior cumulative translation adjustment primarily resulted from the difference between the local functional currency and the Company’s reporting currency. |
Income Taxes: | Income Taxes: The Company is subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company recognizes the tax benefit (expense) from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company recognizes interest expense and penalties related to income tax matters as part of the provision for income taxes. The Company recognizes deferred income taxes as the difference between the tax bases of assets and liabilities and their consolidated financial statement amounts based on enacted tax rates. Management judgment is required in the assessment of the recoverability of the Company’s deferred tax assets based on its assessment of projected taxable income. Numerous factors could affect the Company’s results of operations in the future. If there was a significant decline in the Company’s future operating results, its assessment of the recoverability of its deferred tax assets would need to be revised, and any such adjustment to its deferred tax assets would be charged to income in that period. If necessary, the Company records a valuation allowance to reduce deferred tax assets to an amount management believes is more likely than not to be realized. Changes in estimates of taxable income in the future could result in reversal of the valuation allowances which would be credited to income in the year of reversal. On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) was enacted. The Tax Act significantly revises the U.S. corporate income tax by, among other things, lowering the statutory corporate income tax rate (“federal tax rate”) from 35% to 21% effective January 1, 2018, implementing a modified territorial tax system, and imposing a mandatory one-time transition tax on accumulated earnings of foreign subsidiaries. In December 2017, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 118, which addresses how a company recognizes provisional amounts when a company does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the effect of the changes in the Tax Act. The measurement period ends when a company has obtained, prepared and analyzed the information necessary to finalize its accounting, but cannot extend beyond one year. The final impact of the Tax Act may differ from the above provisional amount due to changes in interpretations of the Tax Act, any legislative action to address questions that arise because of the Tax Act, by changes in accounting standard for income taxes and related interpretations in response to the Tax Act, any updates or changes to estimates used in the provisional amounts. |
Financial Instruments: | Financial Instruments: Financial instruments consist of cash and cash equivalents, short and long-term investments, notes receivable, accounts receivable and payable and accrued liabilities. The carrying amounts of cash and cash equivalents, bank notes, accounts receivable and payable, notes receivable, and accrued liabilities approximate their fair values because of the short-term nature of those instruments. The fair value of long term investments in debt and equity securities is determined based on quoted market prices or available information about investees. |
Foreign Currency Translation: | Foreign Currency Translation: The Company’s operations are conducted through international subsidiaries where the local currency is the functional currency and the financial statements of those subsidiaries are translated from their respective functional currencies into U.S. Dollars which is the functional currency of the Company. All foreign currency assets and liabilities are translated at the period-end exchange rate and all revenues and expenses are translated at the average exchange rate for the period. The effects of translating the financial statements of foreign subsidiaries into U.S. Dollars are reported as a cumulative translation adjustment, a separate component of accumulated other comprehensive income in shareholders’ equity. The foreign currency translation gain (loss) related to the remeasurement of transactions denominated in other than the functional currency is included in other income (expenses), net on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss) . In connection with this remeasurement process, the Company recorded gains of $0.6 million and of $1.5 million and losses of $0.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
Earnings per Share: | Earnings per Share: Basic earnings per share is computed by dividing the net loss available to shareholders by the weighted average number of the Company’s ordinary shares outstanding, as applicable, during the period, which excludes unvested restricted stock. Diluted earnings per share reflects the amount of net loss available to each ordinary share outstanding during the period plus number of additional shares that would have been outstanding if potentially dilutive securities had been issued. The Company’s potentially dilutive ordinary shares include outstanding stock options, unvested restricted stock, restricted stock units and performance- based units. The following table summarizes the total potential ordinary shares that were excluded from the diluted per share calculation, because their effect was anti-dilutive. Years ended December 31, 2017 2016 2015 (in thousands) Anti-dilutive stock options and awards/units outstanding — Total(1) — (1) Calculated using the treasury stock method, which assumes proceeds are used to reduce the dilutive effect of outstanding stock awards. Assumed proceeds include the unrecognized deferred compensation of share awards, and assumed tax proceeds from excess stock-based compensation deductions. For the year ended December 31, 2015, no potential ordinary shares were dilutive because of the net loss incurred in this year, therefore basic and dilutive EPS were the same. For the years ended December 31, 2016 and 2017, 1.4 million and 1.2 million potential ordinary shares were dilutive. After the dilution, the diluted earnings per share during the years ended December 31, 2016 and 2017 were as follows. 2017 2016 (in thousands, except per shares amounts) Net Income attributable to UTStarcom Holdings Corp. $ $ Weighted average shares outstanding—Diluted Net Income per shares attributable to UTStarcom Holdings Corp.—Diluted $ $ |
Recent Accounting Pronouncements: | Recent Accounting Pronouncements: In November 2016, the FASB issued ASU 2016-18, “ Statement of Cash Flows-— Restricted Cash (a consensus of the FASB Emerging Issues Task Force) ”, effective for fiscal years beginning after December 15, 2017, and interim periods within that fiscal year. The standard addresses whether restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopts the ASU 2016-18 using the retrospectively method in the first quarter of 2018, and it would decrease the Company’s cash used in investing activities by $6.2 million in 2017, and would decrease the Company’s cash provided by investing by $1.3 million in 2016. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” (“ASU 2014-09”). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 supersedes most existing US GAAP on revenue recognition and eliminate industry-specific guidance. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of Effective Date (“ASU 2015-14”), which defers the effective date of ASU 2014-09 to January 1, 2018 for the Company. Early adoption is permitted. The Company adopts ASU 2014-09 using the modified retrospective method in the first quarter of 2018. In January, 2017, the FASB issued 2017-01 “ Business Combinations ”, effective for the annual reporting period beginning after December 15, 2017, and interim period within that period. This updated clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or business. The Company evaluated the impact of adopting the new standard on its consolidated financial statements and concluded there was no material impact to the Company’s financial statements. In February 2017, the FASB issued ASU 2017-05 “ Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) ”, effective for the annual reporting period beginning after the December 15, 2017, including the interim reporting period within that period. This update provides guidance on the recognition of gains and losses on transfers of nonfinancial assets and in substance nonfinancial assets to counterparties that are not customers. The Company evaluated the impact of adopting the new standard on its consolidated financial statements and concluded there was no material impact to the Company’s financial statements. In May 2017, the FASB issued ASU 2017-09 “ Compensation—Stock Compensation (Topic 718)” , effective for the annual report period beginning after the December 15, 2017, including the interim reporting period within that period. This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The Company evaluated the impact of adopting the new standard on its consolidated financial statements and concluded there was no material impact to the Company’s financial statements. In January 2018, the FASB issued ASU 2018-01 “ Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842”. The effective date and transition requirement for this amendment is the same as the effective date and transition requirement in update 2016-02. This update provides an optional transition practical expedient to not evaluate under Topic 842 land easements that exist or expired before the entity’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. In addition, the update clarifies that a new or modified land easement should be assessed prospectively under Topic 842 to determine whether it is or contains a lease. The Company evaluated the impact of adopting the new standard on its consolidated financial statements and concluded there was no material impact to the Company’s financial statements. In February 2018, the FASB issued ASU 2018-02 “ Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” , effective for the annual report period beginning after the December 15, 2018 including the interim reporting period within that period. This update allows companies to reclassify from Accumulated Other Comprehensive Income to Retained Earnings stranded tax effects resulting from the enactment of the Tax Cuts and Jobs Act (the “Tax Act”). The Company will adopt this accounting standard update in the first quarter of 2018 on a retrospective basis. The application of this accounting standard update will not have a material impact on the Company’s Consolidated Financial Statements. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of useful lives of property, plant and equipment | Years Equipment and furniture 5 Computers and software 2 - 3 Automobiles 5 Leasehold improvements Lesser of the lease term or estimated useful life |
Schedule of changes in AOCI, including the amounts reclassified to income | Foreign currency (in thousands) Balance at December 31, 2015 $ Gain recorded in other comprehensive income Gain reclassified from AOCI to income ) Balance at December 31, 2016 $ Gain recorded in other comprehensive income Gain reclassified from AOCI to income ) Balance at December 31, 2017 $ |
Summary of the total potential ordinary shares that were excluded from the diluted per share calculation | Years ended December 31, 2017 2016 2015 (in thousands) Anti-dilutive stock options and awards/units outstanding — Total(1) — (1) Calculated using the treasury stock method, which assumes proceeds are used to reduce the dilutive effect of outstanding stock awards. Assumed proceeds include the unrecognized deferred compensation of share awards, and assumed tax proceeds from excess stock-based compensation deductions. |
Schedule of diluted earnings per share | After the dilution, the diluted earnings per share during the years ended December 31, 2016 and 2017 were as follows. 2017 2016 (in thousands, except per shares amounts) Net Income attributable to UTStarcom Holdings Corp. $ $ Weighted average shares outstanding—Diluted Net Income per shares attributable to UTStarcom Holdings Corp.—Diluted $ $ |
COMPREHENSIVE INCOME (LOSS) (Ta
COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
COMPREHENSIVE INCOME (LOSS) | |
Schedule of total comprehensive income (loss) | Years ended December 31, 2017 2016 2015 (in thousands) Net income (loss) $ $ $ ) Other comprehensive loss Realized loss from available-for-sales investment — — ) Net Change in Foreign currency translation ) Total comprehensive income (loss) ) Comprehensive loss attributable to non-controlling interests (1) — — Comprehensive income (loss) attributable to UTStarcom Holdings Corp. $ $ $ ) (1) Comprehensive loss attributable to non-controlling interests consisted solely of net loss. |
BALANCE SHEET DETAILS (Tables)
BALANCE SHEET DETAILS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
BALANCE SHEET DETAILS | |
Schedule of inventories | December 31, December 31, (in thousands) Inventories: Raw materials $ $ Work in process Finished goods (1) Total Inventory $ $ (1) Includes finished goods at customer sites of approximately $10.6 million and $14.5 million at December 31, 2017 and 2016, respectively, for which the customer has taken possession, but based on specific contractual terms, title has not yet passed to the customer and for which revenue has not yet been recognized. |
Schedule of prepaid and other current assets | December 31, December 31, (in thousands) Prepaid and other current assets Prepaid tax $ $ Advance to suppliers (1) Other receivable Prepaid others Total Prepaid and other current assets $ $ (1) The $6.5 million advance to supplier as of December 31, 2017 for financing purpose. |
Schedule of property, plant and equipment, net | December 31, December 31, 2017 2016 (in thousands) Property, plant and equipment, net: Leasehold improvements $ $ Automobiles Software Computer, Equipment and Furniture Other — Total Less: accumulated depreciation ) ) Total Property, plant and equipment, net $ $ |
Schedule of other current liabilities | December 31, December 31, (in thousands) Other current liabilities: Accrued contract costs (1) $ $ Accrued payroll and compensation Warranty costs Accrued professional fees Accrued other taxes Other Total other current liabilities $ $ (1) Accrued contract costs include $7.3 million and $2.9 million cost related to product and service sales contracts from India as of December 31, 2017 and 2016, respectively. |
Schedule of other long-term liabilities | December 31, December 31, (in thousands) Other long-term liabilities Non-current income tax payable $ $ Other Total other long-term liabilities $ $ |
CASH, CASH EQUIVALENTS AND SH29
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | |
Schedule showing break-down of the Company's total long-term investments | Accounting December 31, December 31, Method 2017 2016 (in thousands) UTStarcom Hong Kong Holdings Ltd Cost Method $ $ GCT Semiconductor, Inc. Cost Method — — Xalted Networks Cost Method — — Cortina Cost Method — — SBI Cost Method — — Total Investments using Cost Method ACELAND Equity Method UiTV Equity Method — — AioTV Equity Method — — Shareholder Loan to ACELAND Equity Method — — Total Investments using Equity Method AioTV AFS — Total Investments Classified as AFS — Total Investment $ $ |
Summary of condensed financial information of equity method investees | Condensed Condensed Condensed (in thousands) (in thousands) (in thousands) Operating data: Revenue $ $ — $ — Gross profit $ $ — $ — Income (loss) from operations $ ) $ $ ) Net income (loss) $ ) $ $ ) Net income (loss) attributable to Equity method investees $ ) $ $ ) Year Ended Year Ended Year Ended (in thousands) (in thousands) (in thousands) Balance sheet data: Current assets $ $ $ Long-term assets $ $ $ Current liabilities $ ) $ ) $ ) Long-term liabilities $ — $ — $ — Non-controlling interests $ — $ — $ — |
Summary of available-for-sale investments | The following is a summary of available-for-sale investment as of December 31, 2017: Cost Cash Impairment Transfer-out Realized Estimated (in thousands) Shares of a private company $ $ ) $ — $ — $ — $ — Convertible bonds of privately-held company — ) ) — — Preferred convertible shares of private company — ) — — — Total available-for-sale investments $ $ ) $ ) $ ) $ — $ — The following is a summary of available-for-sale investment as of December 31, 2016: Transfer- Impairment from Cash charges and for-sale Realized Estimated Cost Collection equity losses investments gain fair value (in thousands) Shares of a private company $ $ — $ — $ — $ — $ Convertible bonds of a private company — — — — Preferred convertible shares of a private company — ) — — Total available-for-sale investments $ $ — $ ) $ — $ — $ |
Schedule of financial assets measured and recognized at fair value on a recurring basis and classified under the appropriate level of the fair value hierarchy | Level 1 Level 2 Level 3 Total (in thousands) As of December 31, 2017 Short-term investments $ — $ — $ — $ — Long-term investments — — — — As of December 31, 2016 Short-term investments — — Long-term investments $ — $ — $ $ |
Schedule of changes in financial assets using unobservable inputs (Level 3) | Amount In thousands As of December 31, 2014 $ Less: Share of loss from associates ) Less: Impairment charges ) Less: Cash collection ) Less: Transfer-out from available-for-sale investments ) Add: New investment in convertible bonds Add: Unrealized gain ) As of December 31, 2015 $ Less: Impairment Charges ) Add: New investment in convertible bonds As of December 31, 2016 $ Less: Impairment charges ) Less: Transfer-out from available-for-sale investments ) As of December 31, 2017 $ — |
AioTV | |
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | |
Schedule of significant inputs for the valuation model used to estimate fair value of investments | Year Ended December 31, 2016 Total fair value of invested Capital as at valuation date (in thousands) Risk free rate of interest % Dividend yield % Expiration date 2017/11/14 Volatility % |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum lease payments under all non-cancelable operating leases with an initial term in excess of one year | Future minimum lease payments under all non-cancelable operating leases with an initial term in excess of one year as of December 31, 2017 are as follows: Amount (in thousands) 2018 $ 2019 2020 2021 2022 — Thereafter — Total $ |
COMMON STOCK AND STOCK INCENT31
COMMON STOCK AND STOCK INCENTIVE PLANS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of the assumptions used in the estimating the fair values of stock-based payment awards excluding non-employee | Years ended December 31, Stock Options: 2016 2015 Expected term in years Weighted average risk-free interest rate % % Expected dividend rate % % Volatility % % |
Summary of the stock-based compensation expense recognized in the Company's Consolidated Statement of Operations | Years ended December 31, 2017 2016 2015 (in thousands) Cost of net sales $ $ $ Selling, general and administrative Research and development Total $ $ $ |
2017 Equity Incentive Plan | |
Summary of stock options activity | Weighted Number of average shares exercise outstanding price (in thousands) Options Outstanding, December 31, 2016 $ Options Granted — — Options Exercised ) Options Forfeited or Expired ) Options Outstanding, December 31, 2017 $ |
Summary of unvested restricted awards | Weighted average grant date Shares fair value (in thousands) Total nonvested restricted stock at December 31, 2016 $ Granted Vested ) Forfeited ) Total nonvested restricted stock at December 31, 2017 $ |
Summary of significant ranges of outstanding and exercisable stock options | Weighted Number of shares Average Weighted Number of shares Weighted Range of Outstanding Remaining Average Exercisable Average Exercise Prices as of 12/31/2017 Contractual Term Exercise Price as of 12/31/2017 Exercise Price $ — $ $ $ $ — $ $ $ $ — $ $ $ Number of shares Weighted average exercise Options exercisable as of December 31, 2017 $ Options vested and expected to vest as of December 31, 2017 $ |
2006 Equity Incentive Plan | |
Summary of stock options activity | Number of Weighted shares average outstanding exercise price (in thousands) Options Outstanding, December 31, 2014 $ Options Granted — — Options Exercised ) Options Forfeited or Expired ) Options Outstanding, December 31, 2015 $ Options Granted Options Exercised — — Options Forfeited or Expired ) Options Outstanding, December 31, 2016 $ |
Summary of unvested restricted awards | Weighted average grant date Shares fair value (in thousands) Total nonvested restricted stock at December 31, 2014 $ Granted $ Vested ) $ Forfeited ) $ Total nonvested restricted stock at December 31, 2015 $ Granted $ Vested ) $ Forfeited ) $ Total nonvested restricted stock at December 31, 2016 $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
INCOME TAXES | |
Schedule of United States and foreign income (loss) before income taxes and minority interest | Years Ended December 31, 2017 2016 2015 (in thousands) United States $ ) $ $ Foreign ) ) $ $ $ ) |
Schedule of components of the provision (benefit) for income taxes | Years Ended December 31, 2017 2016 2015 (in thousands) Current Federal $ — $ — $ — State — — — Foreign $ $ ) Total Current $ $ $ ) Deferred Federal — — — State — — — Foreign ) Total Deferred ) Total $ $ $ ) |
Summary of unrecognized tax benefits | Years Ended December 31, 2017 2016 2015 (in thousands) Beginning balance-gross unrecognized tax benefits (UTB’s) $ $ $ Additions based on tax positions related to the current year — — Reductions for tax positions related to prior years — — ) Lapse of statute of limitations ) ) ) Ending balance—gross unrecognized tax benefits (“UTB”s) UTB’s as a credit in deferred taxes ) ) ) Federal benefit of state taxes ) ) ) UTB’s that would impact the effective tax rate $ $ $ |
Summary of the components of net deferred tax assets | December 31, December 31, (in thousands) Deferred Tax Assets Allowances and reserves $ ) $ ) Net operating loss carryforwards Tax credit carryforwards Writedown/amortization of intangible assets and goodwill Fixed assets Demo equipment income Other Total Deferred Tax Assets Deferred Tax Liabilities Prepaid expense ) Accrued warranties ) Other ) ) Total Deferred Tax Liabilities Total Net Deferred Tax Assets $ $ Less: Valuation Allowance $ ) $ ) Total Net Deferred Tax Assets |
Schedule of reconciliation of effective income tax amount and the federal statutory amount | Years Ended December 31, 2017 2016 2015 (in thousands) Federal tax (benefit) at statutory rate $ $ $ ) Stock compensation expense Effect of differences in foreign tax rates ) ) FIN48 reserve ) ) ) Change in deferred tax valuation allowance ) Other Total Tax Expense $ $ $ ) |
OTHER INCOME, NET (Tables)
OTHER INCOME, NET (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
OTHER INCOME, NET | |
Schedule of components of other income, net | Years ended December 31, 2017 2016 2015 (in thousands) Foreign exchange gains (loss) $ $ $ ) Gain from the currency translation adjustment — Tax reversal for expiration of the statute of limitations (1) — — ESA loan impairment (2) — — ESA loan interest (2) — — Realized investment gain (3) — UiTV loan impairment (4) — — ) Other Total $ $ $ (1) Previously, when the Company divested its Korean subsidiary, the Company provided a tax reserve as it offered indemnification to the buyer for the uncertain tax position arising in the periods before the divestiture. In 2016, approximately $0.8 million of such tax reserve was released due to expiration of statute of limitations. (2) The Company signed the loan agreement to for a total amount of $5.6 million in 2012. In the third quarter of 2015, the Company received $6.0 million, including $1.1 million interest income. Accordingly, $2.8 million reserve was reversed and recorded in Other income (expense), net. Therefore, all principal of the outstanding entrusted loan was collected and the contract was closed. (3) The Company received 124,395 shares of Inphi on November 14, 2014 to exchange for the 1% interest in Cortina. Management assessed the shares and classified them as available-for-sale securities and subject to fair value accounting. In the first quarter of 2015, the Company sold the 124,395 shares of Inphi stock for a total cash consideration of $2.4 million, which resulted in a realized gain of $0.6 million in Other Income. In the second quarter of 2015, the Company also received $0.7 million in cash proceeds in connection with the sale of assets that had a $0 net carrying value, resulting in a realized gain in Other Income. In the fourth quarter of 2015, another $0.3 million was released from escrow deposited by Inphi during the transaction and the Company recorded as a realized gain in Other Income. In the second quarter of 2016, another $0.1million was released from escrow deposited by Inphi during the transaction and the Company recorded as a realized gain in Other Income. (4) The other receivable balance includes loans to UiTV of approximately $2.3 million as of December 31, 2015. UiTV used this amount to purchase Set Top Boxes for the Internet television service in Thailand. Pursuant to the contract, UiTV repays in installments, starting from January of 2015 to July of 2018. The Company has performed an assessment on the need for a valuation reserve due to collectability risk and $2.3 million was reserved as of December 31, 2015. |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
NET INCOME (LOSS) PER SHARE | |
Schedule of computation of basic and diluted net loss per share | Years Ended December 31, 2017 2016 2015 (in thousands) Numerator: Net income (loss) attributable to UTStarcom Holdings Corp. $ $ $ ) Denominator: Weighted average shares outstanding-Basic Potentially dilutive common stock equivalents-stock options and restricted stock — Weighted average shares outstanding-Diluted Net Income(loss) per share attributable to UTStarcom Holdings Corp.- Basic $ $ $ ) Net Income(loss) per share attributable to UTStarcom Holdings Corp.-Diluted $ $ $ ) |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
SEGMENT REPORTING | |
Summary of the Company's segment net sales, gross profit and income (loss) before income taxes | Years ended December 31, Net Sales by 2017 % of 2016 % of 2015 % of (in thousands, except percentages) Equipment $ % $ % $ % Services % % % Total Sales $ % $ % $ % Years ended December 31, Gross profit (loss) by 2017 Gross 2016 Gross 2015 Gross (in thousands, except percentages) Equipment $ % $ % $ % Services % % % Total Gross profit $ % $ % $ % Years ended December 31, Segment Margin and Income ( loss ) before income taxes 2017 2016 2015 (in thousands) Equipment $ $ $ Services Total Segment Margin General and Corporate ) ) ) Income (loss) before income taxes $ $ $ ) |
Schedule of sales data by geographical area | Years Ended December 31, 2017 % of net 2016 % of net 2015 % of net (in thousands, except percentages) Net Sales by Region China $ % $ % $ % Japan % % % India % % % Taiwan % % % Other % % % Total $ % $ % $ % |
Schedule of long-lived assets, consisting of property, plant and equipment, by geographical area | December 31, 2017 2016 (in thousands) China $ $ Other Total long-lived assets $ $ |
CREDIT RISK AND CONCENTRATION (
CREDIT RISK AND CONCENTRATION (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
CREDIT RISK AND CONCENTRATION | |
Schedule of customers accounted for 10% or more of the Company's net revenues | For the years ended 2017 2016 2015 Softbank and affiliates % % % Bharat Sanchar Nigam Ltd. and affiliates % % % |
BASIS OF PRESENTATION, LIQUID37
BASIS OF PRESENTATION, LIQUIDITY (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 |
Cash and cash equivalents | $ 79,749 | $ 83,922 | $ 77,050 | $ 77,824 |
Working capital | 78,500 | |||
Subsidiaries | China | ||||
Cash and cash equivalents | 7,900 | $ 13,500 | ||
Accumulated profit determined in accordance with accounting standards of a particular country that can be paid as dividends | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN38
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 | |
Cash and Cash Equivalents | ||||
Cash and cash equivalents | $ 79,749 | $ 83,922 | $ 77,050 | $ 77,824 |
Subsidiaries | United States | ||||
Cash and Cash Equivalents | ||||
Cash and cash equivalents (as a percent) | 46.30% | |||
Cash and cash equivalents | $ 36,900 | |||
Subsidiaries | China | ||||
Cash and Cash Equivalents | ||||
Cash and cash equivalents (as a percent) | 9.90% | |||
Cash and cash equivalents | $ 7,900 | $ 13,500 |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Restricted Cash (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Short-term restricted cash | $ 12,099 | $ 11,397 |
Long-term restricted cash | $ 8,839 | $ 3,321 |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Investment impairment | $ 1,690 | $ 5,336 | $ 16,347 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Revenue Recognition: | |||
Cumulative increase to retained earnings | $ (1,226,173) | $ (1,233,154) | |
ASU 2014-09 | Difference between Revenue Guidance in Effect before and after Topic 606 | |||
Revenue Recognition: | |||
Cumulative increase to retained earnings | $ 7,400 | ||
Unearned revenue | 14,400 | ||
Deferred costs | $ 7,000 | ||
UTSTARCOM HOLDINGS CORP | |||
Revenue Recognition: | |||
Cumulative increase to retained earnings | $ (1,226,174) | $ (1,233,154) |
SUMMARY OF SIGNIFICANT ACCOUN42
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Product Warranty (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Minimum | |
Product Warranty | |
Warranty period | 1 year |
Period after sale to provide limited warranty services | 2 years |
Maximum | |
Product Warranty | |
Warranty period | 2 years |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment | |||
Depreciation | $ 628 | $ 1,208 | $ 2,202 |
Equipment and furniture | |||
Property, Plant and Equipment | |||
Useful lives | 5 years | ||
Computers and software | Minimum | |||
Property, Plant and Equipment | |||
Useful lives | 2 years | ||
Computers and software | Maximum | |||
Property, Plant and Equipment | |||
Useful lives | 3 years | ||
Automobiles | |||
Property, Plant and Equipment | |||
Useful lives | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising Costs and Operating Leases (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Advertising costs | $ 0.1 | $ 0.1 | $ 0.1 |
Maximum | |||
Initial operating lease terms | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accumulated Other Comprehensive Income (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017USD ($)entity | Dec. 31, 2016USD ($)entity | |
Changes in AOCI, including the amounts reclassified to income | ||
Balance | $ 82,741 | $ 83,777 |
Balance | $ 90,992 | $ 82,741 |
Number of entities liquidated | entity | 1 | 2 |
Net loss from the cumulative translation adjustment | $ 1,700 | $ 100 |
AOCI Including Portion Attributable to Noncontrolling Interest | ||
Changes in AOCI, including the amounts reclassified to income | ||
Balance | 62,002 | 61,470 |
Balance | 62,411 | 62,002 |
Foreign currency translation | ||
Changes in AOCI, including the amounts reclassified to income | ||
Gain recorded in other comprehensive income | 2,112 | 570 |
Unrealized gains (losses), net of tax | ||
Changes in AOCI, including the amounts reclassified to income | ||
Gain reclassified from AOCI to income | (1,703) | $ (38) |
AOCI Attributable to Noncontrolling Interest | ||
Changes in AOCI, including the amounts reclassified to income | ||
Balance | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes: | ||
Statutory tax rate (as a percent) | 35.00% | |
Forecast | ||
Income Taxes: | ||
Statutory tax rate (as a percent) | 21.00% |
SUMMARY OF SIGNIFICANT ACCOUN47
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Foreign Currency Translation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Foreign Currency Translation | |||
Gain (loss) on foreign currency translation | $ 619 | $ 1,459 | $ (190) |
SUMMARY OF SIGNIFICANT ACCOUN48
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings per Share | |||
Anti-dilutive stock options and awards/units outstanding (in shares) | 605,000 | 1,295,000 | |
Potential dilutive ordinary shares | 1,200,000 | 1,400,000 | 0 |
Net Income attributable to UTStarcom Holdings Corp. | $ 6,981 | $ 290 | $ (27,158) |
Weighted average shares outstanding-Diluted | 36,176,000 | 36,402,000 | 37,003,000 |
Net income per shares attributable to UTStarcom Holdings Corp.-Diluted | $ 0.19 | $ 0.01 | $ (0.74) |
Stock options and awards/units | |||
Earnings per Share | |||
Anti-dilutive stock options and awards/units outstanding (in shares) | 605,000 | 1,295,000 |
SUMMARY OF SIGNIFICANT ACCOUN49
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Recent Accounting Pronouncements | |||
Decrease in Company's cash provided by (used in) investing activities | $ (10,096) | $ 7,263 | $ 17,424 |
ASU 2016-18 | |||
Recent Accounting Pronouncements | |||
Decrease in Company's cash provided by (used in) investing activities | $ 6,200 | $ (1,300) |
DIVESTITURES - IPTV operations
DIVESTITURES - IPTV operations (Details) - IPTV divestiture - Disposed of by sale, not discontinued operations - USD ($) $ in Millions | Aug. 31, 2012 | Dec. 31, 2012 |
DIVESTITURES | ||
Amount of consideration paid by the Company upon divestiture | $ 30 | |
Net loss on divestitures | $ (17.5) |
DIVESTITURES - Liabilities and
DIVESTITURES - Liabilities and Assets Related to Un-Assigned Contracts (Details) - Disposed of by sale, not discontinued operations - IPTV divestiture - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
DIVESTITURES | ||
Deferred costs related to un-assigned contracts | $ 5.9 | $ 10.2 |
Liabilities associated with the un-assigned contracts | $ 5.9 | $ 10.2 |
COMPREHENSIVE INCOME (LOSS) - T
COMPREHENSIVE INCOME (LOSS) - Total Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
COMPREHENSIVE INCOME (LOSS) | |||
Net income (loss) | $ 6,981 | $ 132 | $ (27,158) |
Other comprehensive loss | |||
Realized loss from available-for-sale investments | (673) | ||
Net Change in Foreign currency translation | 409 | 532 | (1,611) |
Comprehensive income (loss) | 7,390 | 664 | (29,442) |
Comprehensive loss attributable to non-controlling interests | 158 | ||
Comprehensive income (loss) attributable to UTStarcom Holdings Corp. | $ 7,390 | $ 822 | $ (29,442) |
BALANCE SHEET DETAILS - Invento
BALANCE SHEET DETAILS - Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventories: | ||
Raw materials | $ 3,610 | $ 3,821 |
Work in process | 2,674 | 3,362 |
Finished goods | 10,855 | 15,394 |
Total Inventory | 17,139 | 22,577 |
Finished goods at customer sites | $ 10,600 | $ 14,500 |
BALANCE SHEET DETAILS - Prepaid
BALANCE SHEET DETAILS - Prepaid and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Prepaid and other current assets | ||
Prepaid tax | $ 3,927 | $ 3,468 |
Advance to suppliers | 6,542 | 53 |
Other receivable | 983 | 811 |
Prepaid others | 2,775 | 2,663 |
Total Prepaid and other current assets | $ 14,227 | $ 6,995 |
BALANCE SHEET DETAILS - Propert
BALANCE SHEET DETAILS - Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment | |||
Total | $ 35,362 | $ 33,197 | |
Less: accumulated depreciation | (33,648) | (31,587) | |
Total Property, plant and equipment, net | 1,714 | 1,610 | |
Write off of fully depreciated property, plant and equipment | 600 | 19,600 | $ 2,800 |
Accumulated depreciation related to derecognized amount of property, plant and equipment | 600 | 19,600 | 2,800 |
Leasehold improvements | |||
Property, Plant and Equipment | |||
Total | 1,768 | 1,591 | |
Accelerated depreciation related to early lease termination | $ 100 | ||
Automobiles | |||
Property, Plant and Equipment | |||
Total | 1,885 | 1,765 | |
Software | |||
Property, Plant and Equipment | |||
Total | 3,140 | 3,267 | |
Computer, Equipment and Furniture | |||
Property, Plant and Equipment | |||
Total | $ 28,569 | 26,507 | |
Other | |||
Property, Plant and Equipment | |||
Total | $ 67 |
BALANCE SHEET DETAILS - Other C
BALANCE SHEET DETAILS - Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other current liabilities: | ||
Accrued contract costs | $ 7,734 | $ 3,627 |
Accrued payroll and compensation | 7,040 | 5,897 |
Warranty costs | 51 | 44 |
Accrued professional fees | 897 | 394 |
Accrued other taxes | 3,133 | 2,523 |
Other | 4,891 | 4,238 |
Total other current liabilities | 23,746 | 16,723 |
India | ||
Other current liabilities: | ||
Accrued contract costs | $ 7,300 | $ 2,900 |
BALANCE SHEET DETAILS - Other L
BALANCE SHEET DETAILS - Other Long-term Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Other long-term liabilities | ||
Non-current income tax payable | $ 2,530 | $ 3,906 |
Other | 1,123 | 1,075 |
Total other long-term liabilities | $ 3,653 | $ 4,981 |
CASH, CASH EQUIVALENTS AND SH58
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Short-term Investments (Details) $ in Millions | Dec. 31, 2017USD ($) |
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | |
Hold to maturity investment | $ 3.1 |
CASH, CASH EQUIVALENTS AND SH59
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Long-term investments (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | ||
Total investment | $ 5,856 | $ 7,753 |
Cost Method Investments | ||
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | ||
Total investment | 3,499 | 3,499 |
Equity Method Investments | ||
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | ||
Total investment | 2,357 | 2,554 |
AFS | ||
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | ||
Total investment | 1,700 | |
UTStarcom Hong Kong Holdings Ltd. | Cost Method Investments | ||
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | ||
Total investment | 3,499 | 3,499 |
ACELAND | Equity Method Investments | ||
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | ||
Total investment | $ 2,357 | 2,554 |
AioTV | AFS | ||
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | ||
Total investment | $ 1,700 |
CASH, CASH EQUIVALENTS AND SH60
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Long-term Investments, UTStarcom Hong Kong Holdings Ltd (Details) - UTStarcom Hong Kong Holdings Ltd. - Convertible bonds of private company - USD ($) | Apr. 07, 2015 | Aug. 31, 2012 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Payments to Acquire Investments | $ 20,000,000 | ||||
Interest rate of debt securities (as a percent) | 6.50% | ||||
Face amount of convertible debt | $ 20,000,000 | ||||
Proceeds from sale of bond | $ 0.100 | ||||
Ownership interest upon conversion of preference shares and convertible bonds | 14.00% | ||||
Impairment on investment | $ 0 | $ 0 | $ 6,500,000 | ||
Carrying amount of the investment | $ 3,500,000 |
CASH, CASH EQUIVALENTS AND SH61
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Long-term Investments, Cortina (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Sep. 30, 2004 | Dec. 31, 2016 | Dec. 31, 2015 | |
ImmenStar, Inc. | Series A preferred stock | |||
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | |||
Payments to acquire investments | $ 2 | ||
Cortina | |||
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | |||
Gain on sale of shares | $ 0.1 | $ 1.6 |
CASH, CASH EQUIVALENTS AND SH62
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Long-term Investments, GCT Semiconductor (Details) - GCT Semiconductor, Inc. - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2004 | Dec. 31, 2016 | Dec. 31, 2012 | |
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | |||
Payments to acquire investments | $ 3 | ||
Ownership interest (as a percent) | 0.40% | ||
Other-than-temporary impairment charge | $ 0.8 | $ 2.1 | |
Carrying amount of the investment | $ 0 |
CASH, CASH EQUIVALENTS AND SH63
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Long-term Investments, SBI NEO Technology A Investment LPS, or SBI (Details) - SBI - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2012 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2012 | Dec. 31, 2010 | Dec. 31, 2008 | |
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | ||||||||
Payments to acquire investments | $ 600 | $ 700 | $ 700 | $ 500 | ||||
Ownership interest (as a percent) | 2.00% | 2.00% | ||||||
Cash received from investment which was recorded as a reduction to offset the investment | $ 500 | $ 700 | $ 260 | $ 100 | ||||
Wrote off investment amount | $ 200 | |||||||
Carrying amount of the investment | $ 0 |
CASH, CASH EQUIVALENTS AND SH64
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Long-term Investments, Aceland Investments Limited (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2010 | Jun. 30, 2011 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | |||||
Equity pick up of gain (loss) of an associate | $ (687) | $ 984 | $ (13,954) | ||
ACELAND | |||||
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | |||||
Cash paid to acquire investment | $ 2,100 | ||||
Contribution of equity investment through a shareholder loan | $ 7,100 | ||||
Equity method investment, ownership interest (as a percent) | 35.00% | ||||
Investment impairment | $ 1,000 | ||||
Proceeds from sale, maturity and collection of investments | 6,700 | ||||
Equity pick up of gain (loss) of an associate | $ (200) | $ 1,000 | |||
Carrying amount of the investment | $ 2,400 |
CASH, CASH EQUIVALENTS AND SH65
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Long-term Investments, AioTV Inc. (Details) - USD ($) | May 30, 2017 | Dec. 07, 2015 | Nov. 30, 2012 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Significant inputs for the valuation model | ||||||||||
Investment impairment | $ 1,690,000 | $ 5,336,000 | $ 16,347,000 | |||||||
Equity income (loss) of associates | $ (687,000) | 984,000 | $ (13,954,000) | |||||||
AioTV | ||||||||||
Significant inputs for the valuation model | ||||||||||
Carrying amount of the investment | $ 1,700,000 | 1,700,000 | ||||||||
AioTV | Common Stock | ||||||||||
Significant inputs for the valuation model | ||||||||||
Preferred stock converted to common shares | 25,527,008 | |||||||||
Convertible debentures converted to ordinary shares | 2,269,856 | |||||||||
Debt instrument, conversion price (in dollars per share) | $ 0.253790596 | |||||||||
AioTV | Series B preferred stock | ||||||||||
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS | ||||||||||
Investment amount | $ 8,000,000 | |||||||||
Per share price of investment | $ 0.320937 | |||||||||
Equity method investment, ownership interest (as a percent) | 45.00% | 45.00% | ||||||||
Significant inputs for the valuation model | ||||||||||
Total fair value of invested Capital as at valuation date | $ 900,000 | |||||||||
Risk free rate of interest (as a percent) | 0.80% | |||||||||
Dividend yield (as a percent) | 0.00% | |||||||||
Expiration date | Nov. 14, 2017 | |||||||||
Volatility (as a percent) | 41.00% | |||||||||
Discount rate (as a percent) | 50.00% | |||||||||
Investment impairment | $ 4,300,000 | |||||||||
Carrying amount of the investment | 900,000 | 900,000 | ||||||||
Convertible shares | 25,527,008 | |||||||||
AioTV | Convertible bonds of private company | ||||||||||
Significant inputs for the valuation model | ||||||||||
Payment to acquire available-for-sale debt securities | $ 500,000 | $ 300,000 | ||||||||
Interest rate of debt securities (as a percent) | 10.00% | 10.00% | ||||||||
Investment impairment | $ 400,000 | 0 | ||||||||
Carrying amount of the investment | $ 0 | $ 0 | $ 800,000 | $ 0 | $ 800,000 | |||||
Equity income (loss) of associates | $ (200,000) | (200,000) | ||||||||
Common stocks | $ 0 | |||||||||
Loss from equity method investment (as a percent) | 45.00% | 45.00% | ||||||||
Note Purchase Agreement | AioTV | ||||||||||
Significant inputs for the valuation model | ||||||||||
Principal amount | $ 320,000 | |||||||||
Capital value | $ 160,000 | |||||||||
Note Purchase Agreement | AioTV | Common Stock | ||||||||||
Significant inputs for the valuation model | ||||||||||
Conversion price (in dollars per share) | $ 0.320937 | |||||||||
Note Purchase Agreement | AioTV | Convertible bonds of private company | ||||||||||
Significant inputs for the valuation model | ||||||||||
Investment impairment | $ 1,300,000 | |||||||||
Equity income (loss) of associates | $ (100,000) | |||||||||
Convertible promissory note, value | $ 800,000 | |||||||||
Payments to acquire investments | $ 380,000 | $ 100,000 | ||||||||
Note Purchase Agreement | AioTV | Convertible debentures | ||||||||||
Significant inputs for the valuation model | ||||||||||
Principal amount | 576,068 | |||||||||
Accrued and unpaid interests | $ 500,000 |
CASH, CASH EQUIVALENTS AND SH66
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Long-term Investments, UiTV (Details) - USD ($) $ in Thousands | Jun. 21, 2012 | Oct. 16, 2010 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||||||||
Equity in net income (loss) of affiliated companies | $ (687) | $ 984 | $ (13,954) | |||||
Investment impairment | $ 1,690 | $ 5,336 | 16,347 | |||||
UiTV | ||||||||
Business Acquisition [Line Items] | ||||||||
Payments to acquire investments | $ 30,000 | |||||||
Percentage of shares acquired | 75.00% | |||||||
Aggregate cash consideration | $ 20,000 | |||||||
Percentage of ownership lost | 49.00% | |||||||
UiTV | Convertible bonds of private company | ||||||||
Business Acquisition [Line Items] | ||||||||
Payment to acquire available-for-sale debt securities | $ 35,100 | |||||||
Interest rate of debt securities (as a percent) | 6.50% | |||||||
Equity in net income (loss) of affiliated companies | (14,000) | $ (3,600) | ||||||
Amount invested | $ 0 | $ 0 | ||||||
Loss from equity method investment (as a percent) | 100.00% | 100.00% | ||||||
Investment impairment | $ 6,000 | $ 2,400 | $ 9,100 | |||||
UiTV | Series A preferred stock | ||||||||
Business Acquisition [Line Items] | ||||||||
Equity in net income (loss) of affiliated companies | $ (5,300) | $ (9,600) | ||||||
Amount invested | $ 0 | $ 0 | ||||||
Loss from equity method investment (as a percent) | 49.00% | 49.00% | ||||||
UiTV | Common Stock | ||||||||
Business Acquisition [Line Items] | ||||||||
Aggregate purchase price | $ 10,000 |
CASH, CASH EQUIVALENTS AND SH67
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Summary of Equity Investee Data (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating data: | |||
Revenue | $ 15 | ||
Gross profit | 15 | ||
Income (loss) from operations | (1,906) | $ 950 | $ (9) |
Net income (loss) | (2,524) | 2,812 | (9) |
Net income (loss) attributable to Equity method investees | (1,079) | 984 | (3) |
Balance sheet data: | |||
Current assets | 14,859 | 18,616 | 7 |
Long-term assets | 148 | 105 | 18,238 |
Current liabilities | $ (12,150) | $ (11,669) | $ (14,135) |
CASH, CASH EQUIVALENTS AND SH68
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Summary of Available-for-sale Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | $ 2,179 | $ 6,479 |
Cash Collection | (479) | |
Impairment charges and equity losses | (1,308) | (4,300) |
Transfer-out from available-for-sale investments | (392) | |
Estimated fair value | 2,179 | |
Level 3 | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Estimated fair value | $ 0 | |
Minimum | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Maturity period of bank notes receivable | 3 months | |
Maximum | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Maturity period of bank notes receivable | 1 year | |
Shares of a private company | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | $ 479 | 479 |
Cash Collection | (479) | |
Estimated fair value | 479 | |
Convertible bonds of private company | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 800 | 800 |
Impairment charges and equity losses | (408) | |
Transfer-out from available-for-sale investments | (392) | |
Estimated fair value | 800 | |
Preferred convertible shares of private company | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Cost | 900 | 5,200 |
Impairment charges and equity losses | $ (900) | (4,300) |
Estimated fair value | $ 900 |
CASH, CASH EQUIVALENTS AND SH69
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Schedule of Financial Assets Measured and Recognized at Fair Value on a Recurring Basis and Classified under the Appropriate Level of the Fair Value Hierarchy (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair value, assets and liabilities on a recurring and non-recurring basis | ||
Long-term investments | $ 5,856 | $ 7,753 |
Recurring | ||
Fair value, assets and liabilities on a recurring and non-recurring basis | ||
Short-term investments | 479 | |
Long-term investments | 1,700 | |
Level 3 | Recurring | ||
Fair value, assets and liabilities on a recurring and non-recurring basis | ||
Short-term investments | 479 | |
Long-term investments | $ 1,700 |
CASH, CASH EQUIVALENTS AND SH70
CASH, CASH EQUIVALENTS AND SHORT AND LONG TERM INVESTMENTS - Schedule of Changes in Financial Assets using Unobservable Inputs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in financial assets using unobservable inputs (Level 3) | |||
Balance at the beginning of the period | $ 1,700 | $ 5,700 | $ 48,200 |
Less: Share of loss from associates | (13,954) | ||
Less: Impairment charges | (1,308) | (4,300) | (8,846) |
Less: Cash collection | (10,000) | ||
Less: Transfer-out from available-for-sale investments | $ (392) | (10,000) | |
Add: New investment in convertible bonds | 300 | 500 | |
Add: Unrealized gain | (200) | ||
Balance at the end of the period | $ 1,700 | $ 5,700 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Future Minimum Lease Payments Under All Non-Cancelable Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Leases | |||
2,018 | $ 1,575 | ||
2,019 | 1,497 | ||
2,020 | 1,013 | ||
2,021 | 591 | ||
Total | 4,676 | ||
Rent expense | |||
Rent expense | 1,900 | $ 1,400 | $ 1,600 |
India Department of Telecommunication Security and Supply Chain Standards | |||
Revenues from security agreements | 98,292 | 86,512 | 117,103 |
Cost of goods sold | 65,146 | 58,156 | 89,235 |
Equipment revenue | 77,283 | 61,735 | 87,361 |
Cost of goods sold | 50,636 | 41,472 | 65,891 |
Equipment based service revenue | 21,009 | 24,777 | 29,742 |
Cost of services | 14,510 | $ 16,684 | 23,344 |
Security agreements with customers, as required by India's Department of Telecommunications ("DOT") | |||
India Department of Telecommunication Security and Supply Chain Standards | |||
Revenues from security agreements | $ 11,800 | ||
Revenue recognition, assessment period | 5 years | ||
Cost of goods sold | $ 5,400 | ||
Equipment revenue | $ 0 | 5,600 | |
Cost of goods sold | 5,400 | ||
Equipment based service revenue | 6,200 | ||
Cost of services | $ 10 |
COMMITMENTS AND CONTINGENCIES72
COMMITMENTS AND CONTINGENCIES - Contractual obligations and commercial commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2013 | |
COMMITMENTS AND CONTINGENCIES | ||||
Outstanding letters of credit | $ 20,900 | |||
Outstanding purchase commitments, including agreements that are non-cancelable and cancelable | 106,300 | |||
Uncertain Tax Positions | ||||
Gross unrecognized tax benefits | 18,728 | $ 20,137 | $ 22,694 | $ 45,382 |
Unrecognized tax benefits that would impact the annual effective tax rate if recognized | 2,061 | $ 3,470 | $ 6,027 | |
Unrecognized tax benefits if recognized, would impact certain deferred tax assets | $ 16,700 |
COMMON STOCK REPURCHASE AND I73
COMMON STOCK REPURCHASE AND ISSUANCE - Repurchase Program November 2014 (Details) - USD ($) $ in Thousands | Nov. 12, 2014 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Equity, Class of Treasury stock | ||||
Value of shares repurchased | $ 140 | $ 4,096 | $ 3,695 | |
Repurchase program November 2014 | ||||
Equity, Class of Treasury stock | ||||
Share repurchase program, Authorized amount | $ 40,000 | |||
Share repurchase program, Period in force | 24 months | |||
Shares repurchased under program | 72,739 | 2,054,655 | 1,563,302 | |
Value of shares repurchased | $ 100 | $ 4,100 | $ 3,700 |
COMMON STOCK AND STOCK INCENT74
COMMON STOCK AND STOCK INCENTIVE PLANS - Stock Incentive Plans (Details) - shares | Jan. 04, 2016 | Jul. 21, 2006 | Dec. 31, 2017 | Dec. 31, 2016 | Nov. 04, 2016 |
2017 Equity Incentive Plan | |||||
Stock Incentive Plans | |||||
Number of shares authorized | 2,000,000 | ||||
Number of ordinary shares available for issuance pursuant to future grants | 3,469,239 | 2,960,940 | 960,940 | ||
Number of shares transferred from the prior plan | 960,940 | ||||
Vesting period | 4 years | ||||
2017 Equity Incentive Plan | Stock Options and Restricted Stock Units RSU | |||||
Stock Incentive Plans | |||||
Number of awards outstanding (in shares) | 1,165,623 | ||||
2006 Equity Incentive Plan | |||||
Stock Incentive Plans | |||||
Number of shares authorized | 1,500,000 | ||||
Number of awards outstanding (in shares) | 2,042,798 | ||||
Number of shares expired | 1,546,927 | ||||
Number of ordinary shares available for issuance pursuant to future grants | 1,022,114 | ||||
Number of additional shares authorized | 1,500,000 | ||||
Number of shares transferred from the prior plan | 8,474,347 | ||||
Vesting period | 4 years | ||||
2006 Equity Incentive Plan | Employee and Directors Stock Options | |||||
Stock Incentive Plans | |||||
Expiration term | 7 years | ||||
2006 Equity Incentive Plan | Incentive Stock Option | |||||
Stock Incentive Plans | |||||
Expiration term | 5 years | ||||
Percentage of voting power required of the company's stock for specified vesting period | 10.00% | ||||
2006 Equity Incentive Plan | Minimum | Stock Options and Restricted Stock Units RSU | |||||
Stock Incentive Plans | |||||
Vesting period | 1 year | ||||
2006 Equity Incentive Plan | Minimum | Employee and Directors Stock Options | |||||
Stock Incentive Plans | |||||
Exercise price as a percentage of the fair market value of an ordinary share on the date of grant | 100.00% | ||||
2006 Equity Incentive Plan | Maximum | Stock Options and Restricted Stock Units RSU | |||||
Stock Incentive Plans | |||||
Vesting period | 4 years | ||||
2006 Equity Incentive Plan | Maximum | Employee and Directors Stock Options | |||||
Stock Incentive Plans | |||||
Percentage of voting power required of the company's stock for specified exercise price | 110.00% |
COMMON STOCK AND STOCK INCENT75
COMMON STOCK AND STOCK INCENTIVE PLANS - Stock Option Activity (Details) - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
2017 Equity Incentive Plan | |||
Number of shares outstanding | |||
Options Outstanding at the beginning of the period (in shares) | 605 | ||
Options Exercised (in shares) | (52) | ||
Options Forfeited or Expired (in shares) | (309) | ||
Options Outstanding at the end of the period (in shares) | 244 | 605 | |
Weighted average exercise price | |||
Options Outstanding at the beginning of the period (in dollars per share) | $ 2.78 | ||
Options Exercised (in dollars per share) | 2.62 | ||
Options Forfeited or Expired (in dollars per share) | 3.22 | ||
Options Outstanding at the end of the period (in dollars per share) | $ 2.26 | $ 2.78 | |
2006 Equity Incentive Plan | |||
Number of shares outstanding | |||
Options Outstanding at the beginning of the period (in shares) | 605 | 415 | 558 |
Options Granted (in shares) | 267 | ||
Options Exercised (in shares) | (12) | ||
Options Forfeited or Expired (in shares) | (77) | (131) | |
Options Outstanding at the end of the period (in shares) | 605 | 415 | |
Weighted average exercise price | |||
Options Outstanding at the beginning of the period (in dollars per share) | $ 2.78 | $ 6.11 | $ 6.33 |
Options Granted (in dollars per share) | 2.24 | ||
Options Exercised (in dollars per share) | 3.48 | ||
Options Forfeited or Expired (in dollars per share) | 18.79 | 7.30 | |
Options Outstanding at the end of the period (in dollars per share) | $ 2.78 | $ 6.11 |
COMMON STOCK AND STOCK INCENT76
COMMON STOCK AND STOCK INCENTIVE PLANS - Unvested Restricted Awards (Details) $ / shares in Units, shares in Thousands, $ in Millions | Jul. 21, 2006 | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares |
2017 Equity Incentive Plan | ||||
Restricted stock awards | ||||
Vesting period | 4 years | |||
2017 Equity Incentive Plan | Restricted Stock | ||||
Restricted stock awards | ||||
Vesting period | 4 years | |||
Ratio for grant of stock awards that is deducted from the shares available for grant | 1 | |||
Shares | ||||
Total nonvested restricted stock at the beginning of the period (in shares) | shares | 1,438 | |||
Granted (in shares) | shares | 76 | |||
Vested (in shares) | shares | (364) | |||
Forfeited (in shares) | shares | (229) | |||
Total nonvested restricted stock at the end of the period (in shares) | shares | 921 | 1,438 | ||
Weighted average grant date fair value | ||||
Total nonvested restricted stock at the beginning of the period (in dollars per share) | $ / shares | $ 2.28 | |||
Granted (in dollars per share) | $ / shares | 2.34 | |||
Vested (in dollars per share) | $ / shares | 2.27 | |||
Forfeited (in dollars per share) | $ / shares | 3.64 | |||
Total nonvested restricted stock at the end of the period (in dollars per share) | $ / shares | $ 1.96 | $ 2.28 | ||
Fair value of restricted stock awards vested | $ | $ 0.8 | |||
2017 Equity Incentive Plan | Restricted Stock | Maximum | ||||
Restricted stock awards | ||||
Vesting period | 4 years | |||
2006 Equity Incentive Plan | ||||
Restricted stock awards | ||||
Vesting period | 4 years | |||
2006 Equity Incentive Plan | Restricted Stock | ||||
Shares | ||||
Total nonvested restricted stock at the beginning of the period (in shares) | shares | 1,438 | 1,056 | 1,481 | |
Granted (in shares) | shares | 1,124 | 422 | ||
Vested (in shares) | shares | (624) | (427) | ||
Forfeited (in shares) | shares | (118) | (420) | ||
Total nonvested restricted stock at the end of the period (in shares) | shares | 1,438 | 1,056 | ||
Weighted average grant date fair value | ||||
Total nonvested restricted stock at the beginning of the period (in dollars per share) | $ / shares | $ 2.28 | $ 2.72 | $ 2.90 | |
Granted (in dollars per share) | $ / shares | 2.19 | 2.47 | ||
Vested (in dollars per share) | $ / shares | 2.77 | 3.07 | ||
Forfeited (in dollars per share) | $ / shares | 2.70 | 2.76 | ||
Total nonvested restricted stock at the end of the period (in dollars per share) | $ / shares | $ 2.28 | $ 2.72 | ||
Fair value of restricted stock awards vested | $ | $ 1.7 | $ 1.3 |
COMMON STOCK AND STOCK INCENT77
COMMON STOCK AND STOCK INCENTIVE PLANS - Significant Ranges of Outstanding and Exercisable Stock Options (Details) | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Options exercisable and vested and expected to vest at the end of the period | |
Number of options exercisable (in shares) | shares | 44,371 |
Weighted-average exercise price per share of options exercisable (in dollars per share) | $ 2.36 |
Number of options vested and expected to vest (in shares) | shares | 244,321 |
Weighted-average exercise price per share of options vested and expected to vest (in dollars per share) | $ 2.26 |
Exercise Price Range from Dollars 2.24 to 2.24 | |
Exercise Price Range | |
Exercise price, low end of range (in dollars per share) | 2.24 |
Exercise price, high end of range (in dollars per share) | $ 2.24 |
Stock Options Outstanding | |
Number of shares outstanding (in shares) | shares | 241,600 |
Weighted-average remaining contractual life | 5 years 29 days |
Weighted-average exercise price per share (in dollars per share) | $ 2.24 |
Stock Options Exercisable | |
Number of shares Exercisable (in shares) | shares | 41,650 |
Weighted-average exercise price per share (in dollars per share) | $ 2.24 |
Exercise Price Range from Dollars 4.17 to 4.17 | |
Exercise Price Range | |
Exercise price, low end of range (in dollars per share) | 4.17 |
Exercise price, high end of range (in dollars per share) | $ 4.17 |
Stock Options Outstanding | |
Number of shares outstanding (in shares) | shares | 2,721 |
Weighted-average remaining contractual life | 8 months 1 day |
Weighted-average exercise price per share (in dollars per share) | $ 4.17 |
Stock Options Exercisable | |
Number of shares Exercisable (in shares) | shares | 2,721 |
Weighted-average exercise price per share (in dollars per share) | $ 4.17 |
Exercise Price Range From Dollars 2.24 To 4.17 | |
Exercise Price Range | |
Exercise price, low end of range (in dollars per share) | 2.24 |
Exercise price, high end of range (in dollars per share) | $ 4.17 |
Stock Options Outstanding | |
Number of shares outstanding (in shares) | shares | 244,321 |
Weighted-average remaining contractual life | 5 years 11 days |
Weighted-average exercise price per share (in dollars per share) | $ 2.26 |
Stock Options Exercisable | |
Number of shares Exercisable (in shares) | shares | 44,371 |
Weighted-average exercise price per share (in dollars per share) | $ 2.36 |
COMMON STOCK AND STOCK INCENT78
COMMON STOCK AND STOCK INCENTIVE PLANS - Intrinsic Value (Details) - $ / shares | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 29, 2017 | Dec. 30, 2016 | |
2017 Equity Incentive Plan | ||||
Market value of shares as reported by NASDAQ ((in dollars per share) | $ 5.63 | |||
Weighted average remaining contractual life of options exercisable | 2 years 29 days | 2 years 1 month 17 days | ||
Weighted average remaining contractual life of options expected to vest | 5 years 11 days | 4 years 5 months 12 days | ||
2006 Equity Incentive Plan | ||||
Market value of shares as reported by NASDAQ ((in dollars per share) | $ 2 | |||
Weighted average remaining contractual life of options exercisable | 2 years 1 month 17 days | |||
Weighted average remaining contractual life of options expected to vest | 4 years 5 months 12 days |
COMMON STOCK AND STOCK INCENT79
COMMON STOCK AND STOCK INCENTIVE PLANS - Dividend Yield, Black-Scholes Assumptions and Unrecognized Compensation Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Black-Scholes option pricing model with the assumptions | |||
Expected term in years | 4 years 9 months | 4 years 9 months | |
Weighted average risk-free interest rate | 1.30% | 1.50% | |
Expected dividend rate | 0.00% | 0.00% | 0.00% |
Volatility | 51.60% | 72.70% | |
Unrecognized compensation cost related to unvested stock options and restricted stock and restricted stock units | |||
Unrecognized compensation cost | $ 0.8 | $ 1.8 | |
Expected weighted-average period of unrecognized cost | 1 year 2 months 23 days | 1 year 10 months 13 days |
COMMON STOCK AND STOCK INCENT80
COMMON STOCK AND STOCK INCENTIVE PLANS - Allocation of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stock based compensation expense | |||
Stock-based compensation expense recognized | $ 866 | $ 2,238 | $ 1,546 |
Cost of Sales | |||
Stock based compensation expense | |||
Stock-based compensation expense recognized | 12 | 1 | 40 |
Selling, General and Administrative Expenses | |||
Stock based compensation expense | |||
Stock-based compensation expense recognized | 793 | 2,193 | 1,392 |
Research and Development Expense | |||
Stock based compensation expense | |||
Stock-based compensation expense recognized | $ 61 | $ 44 | $ 114 |
INCOME TAXES (Schedule of Unite
INCOME TAXES (Schedule of United States and foreign Income (Loss) Before Income Taxes and Non-Controlling Interest) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
United States and foreign income (loss) before income taxes and non-controlling interest | |||
United States | $ (29,673) | $ 7,905 | $ 19,717 |
Foreign | 37,917 | (6,985) | (51,037) |
Income (loss) before income taxes | 8,244 | $ 920 | $ (31,320) |
CAYMAN ISLANDS | |||
INCOME TAXES | |||
Withholding tax | $ 0 |
INCOME TAXES (Schedule of Compo
INCOME TAXES (Schedule of Components of Provision (Benefit) for Income Taxes) (Details) - USD ($) | Dec. 31, 2017 | Nov. 02, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current | ||||||
Foreign | $ 2,355,000 | $ 17,000 | $ (5,193,000) | |||
Total Current | 2,355,000 | 17,000 | (5,193,000) | |||
Deferred | ||||||
Foreign | (1,092,000) | 771,000 | 1,031,000 | |||
Total Deferred | (1,092,000) | 771,000 | 1,031,000 | |||
Total Tax Expense (benefit) | $ 1,263,000 | $ 788,000 | $ (4,162,000) | |||
Statutory tax rate (as a percent) | 35.00% | |||||
Deemed repatriation tax liability | $ 0 | $ 0 | ||||
Forecast | ||||||
Deferred | ||||||
Statutory tax rate (as a percent) | 21.00% |
INCOME TAXES (Summary of Unreco
INCOME TAXES (Summary of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
INCOME TAXES | |||
Unrecognized tax benefits related to deferred tax assets and federal tax benefit of state income tax items | $ 16,700 | ||
Decrease in provision for income taxes due to reduction of gross unrecognized tax benefits | 1,400 | ||
Accrued interest and penalties | 400 | $ 400 | |
Unrecognized tax benefits | |||
Beginning balance-gross unrecognized tax benefits (UTB's) | 20,137 | 22,694 | |
Additions based on tax positions related to the current year | $ 48 | ||
Reductions for tax positions related to prior years | (835) | ||
Lapse of statute of limitations | (1,409) | (2,557) | (21,901) |
Ending balance-gross unrecognized tax benefits ("UTB"s) | 18,728 | 20,137 | 22,694 |
UTB's as a credit in deferred taxes | (14,604) | (14,604) | (14,604) |
Federal benefit of state taxes | (2,063) | (2,063) | (2,063) |
UTB's that would impact the effective tax rate | $ 2,061 | $ 3,470 | $ 6,027 |
INCOME TAXES (Summary of Compon
INCOME TAXES (Summary of Components of Net Deferred Tax Assets) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred Tax Assets | ||
Allowances and reserves | $ (9,689) | $ (8,969) |
Net operating loss carryforwards | 165,408 | 237,393 |
Tax credit carryforwards | 60,807 | 67,579 |
Written-down/amortization of intangible assets and goodwill | 1,421 | 5,554 |
Fixed assets | 3,448 | 5,997 |
Demo equipment income | 4,415 | 7,357 |
Other | 13,230 | 16,352 |
Total Deferred Tax Assets | 239,040 | 331,263 |
Deferred Tax Liabilities | ||
Prepaid expense | (29) | 736 |
Accrued warranties | 663 | (92) |
Other | (330) | (334) |
Total Deferred Tax Liabilities | 304 | 310 |
Total Net Deferred Tax Assets | 239,344 | 331,573 |
Less: Valuation Allowance | (236,332) | (329,523) |
Total Net Deferred Tax Assets | $ 3,012 | $ 2,050 |
INCOME TAXES (Operating Loss Ca
INCOME TAXES (Operating Loss Carryforwards) (Details) $ in Millions | Dec. 31, 2017USD ($) |
U.S Federal and State | |
Operating loss carryforwards | |
Valuation allowance against the related deferred tax assets | $ 140.2 |
U.S Federal | |
Operating loss carryforwards | |
Net operating loss carryforwards | 570.3 |
State | |
Operating loss carryforwards | |
Net operating loss carryforwards | 292 |
Foreign | China | |
Operating loss carryforwards | |
Net operating loss carryforwards | 55.7 |
Valuation allowance against the related deferred tax assets | 8.3 |
Foreign | Countries other than the U.S. and China | |
Operating loss carryforwards | |
Net operating loss carryforwards | 102.8 |
Valuation allowance against the related deferred tax assets | $ 17.7 |
INCOME TAXES (Tax Credit) (Deta
INCOME TAXES (Tax Credit) (Details) $ in Millions | Dec. 31, 2017USD ($) |
U.S Federal | |
Tax credit carryforwards | |
Valuation allowance against the related deferred tax assets | $ 60.8 |
U.S Federal | Alternative minimum tax credit carryforwards | |
Tax credit carryforwards | |
Tax credit carryforwards | 1 |
U.S Federal | Research and development credit carryforwards | |
Tax credit carryforwards | |
Tax credit carryforwards | 8 |
Tax Credit Carry Forward Amount Not Subject To Expiration | 2.5 |
Tax Credit Carry Forward Amount Subject To Expiration | 5.5 |
Foreign | |
Tax credit carryforwards | |
Tax credit carryforwards | $ 51.8 |
INCOME TAXES (Schedule of Recon
INCOME TAXES (Schedule of Reconciliation of Effective Income Tax Rate and Federal Statutory Rate) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reconciliation of effective income tax rate and the federal statutory rate | |||
Federal tax (benefit) at statutory rate | $ 2,885 | $ 322 | $ (10,962) |
Stock compensation expense | 295 | 463 | 508 |
Effect of differences in foreign tax rates | (6,793) | 4,475 | (1,520) |
FASB Interpretation No.48" Accounting for Uncertainty in Income taxes" reserve | (1,478) | (2,465) | (7,433) |
Change in deferred tax valuation allowance | 5,971 | (3,015) | 14,241 |
Other | 383 | 1,008 | 1,004 |
Total Tax Expense (benefit) | $ 1,263 | $ 788 | $ (4,162) |
INCOME TAXES (Other - Narrative
INCOME TAXES (Other - Narrative) (Details) $ in Thousands | Oct. 11, 2014 | Jan. 01, 2008 | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
INCOME TAXES | |||||
Statutory tax rate (as a percent) | 35.00% | ||||
Change in deferred tax valuation allowance | $ 5,971 | $ (3,015) | $ 14,241 | ||
Income tax benefit related to tax credits | $ 0 | $ 0 | $ 0 | ||
China | |||||
INCOME TAXES | |||||
Foreign statutory tax rate (as a percent) | 25.00% | ||||
Reduced tax rate for qualified high technology enterprises (as a percent) | 15.00% | ||||
China | U T Starcom Telecom Co Ltd | |||||
INCOME TAXES | |||||
Number of subsidiaries approved for the reduced tax rate | item | 1 | ||||
Reduced tax rate for qualified high technology enterprises (as a percent) | 15.00% | 15.00% | |||
Valid period for reduced income tax rate applicable to qualified high technology enterprise | 3 years | 3 years |
OTHER INCOME, NET (Schedule of
OTHER INCOME, NET (Schedule of Components of Other Income, Net) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
OTHER INCOME, NET | |||
Foreign exchange gains (loss) | $ 619 | $ 1,459 | $ (190) |
Gain from the currency translation adjustment | 1,703 | 38 | |
Tax reversal for expiration of the statute of limitations | 807 | ||
ESA loan impairment | 2,788 | ||
ESA loan interest | 1,129 | ||
Realized investment gain | 83 | 1,529 | |
UiTV loan impairment | (2,250) | ||
Other | 654 | 361 | 483 |
Total | $ 2,976 | $ 2,748 | $ 3,489 |
OTHER INCOME, NET (Schedule o90
OTHER INCOME, NET (Schedule of Components of Other Income, Net) (Details) - USD ($) $ in Millions | Nov. 14, 2014 | Jun. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2012 |
ESA Cultural Investment (Hong Kong) limited | ||||||||
OTHER INCOME (EXPENSES), NET | ||||||||
Loans receivable, maximum borrowing amount | $ 5.6 | |||||||
Proceeds from Collection of Loans Receivable | $ 6 | |||||||
Proceeds from Interest Received | 1.1 | |||||||
ESA Cultural Investment (Hong Kong) limited | Other income (expense), net | ||||||||
OTHER INCOME (EXPENSES), NET | ||||||||
Loan amount reserved due to collectability risk | $ 2.8 | |||||||
UiTV | ||||||||
OTHER INCOME (EXPENSES), NET | ||||||||
Loan amount reserved due to collectability risk | $ 2.3 | |||||||
Inphi Corporation | ||||||||
OTHER INCOME (EXPENSES), NET | ||||||||
Shares received in exchange of interest in related party | 124,395 | |||||||
Equity Securities Sold During Period Shares | 124,395 | |||||||
Proceeds from sale of equity | $ 2.4 | |||||||
Realized gain on other income | $ 0.6 | |||||||
Cash proceeds from sale of assets | $ 0.7 | |||||||
Net carrying value of assets sold | $ 0 | |||||||
Escrow deposit | $ 0.3 | |||||||
Inphi Corporation | Other income (expense), net | ||||||||
OTHER INCOME (EXPENSES), NET | ||||||||
Escrow deposit | $ 0.1 | |||||||
Cortina | ||||||||
OTHER INCOME (EXPENSES), NET | ||||||||
Investment Ownership Percentage Disposed Of | 1.00% |
NET INCOME (LOSS) PER SHARE (Sc
NET INCOME (LOSS) PER SHARE (Schedule of Computation of Basic and Diluted Net Income Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Numerator: | |||
Net income (loss) attributable to UTStarcom Holdings Corp. | $ 6,981 | $ 290 | $ (27,158) |
Denominator: | |||
Weighted average shares outstanding - Basic | 35,467,000 | 35,806,000 | 37,003,000 |
Potentially dilutive common stock equivalents-stock options and restricted stock (in shares) | 709,000 | 596,000 | |
Weighted average shares outstanding-Diluted | 36,176,000 | 36,402,000 | 37,003,000 |
Net Income (loss) per share attributable to UTStarcom Holdings Corp. - Basic | $ 0.20 | $ 0.01 | $ (0.74) |
Net income (loss) per share attributable to UTStarcom Holdings Corp.-Diluted | $ 0.19 | $ 0.01 | $ (0.74) |
Potential dilutive ordinary shares | 1,200,000 | 1,400,000 | 0 |
SEGMENT REPORTING (Summary of t
SEGMENT REPORTING (Summary of the Company's Segment Net Sales, Gross Profit and Segment Margin) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
SEGMENT REPORTING | |||
Net Sales by Segment | $ 98,292 | $ 86,512 | $ 117,103 |
Net Sales by Segment (as a percent) | 100.00% | 100.00% | 100.00% |
Gross profit (loss) by Segment | $ 33,146 | $ 28,356 | $ 27,868 |
Gross profit (loss) by Segment (as a percent) | 34.00% | 33.00% | 24.00% |
Income (loss) before income taxes | $ 8,244 | $ 920 | $ (31,320) |
Operating segments | |||
SEGMENT REPORTING | |||
Total Segment Margin | 23,346 | 20,103 | 18,496 |
Operating segments | Equipment | |||
SEGMENT REPORTING | |||
Net Sales by Segment | $ 77,283 | $ 61,735 | $ 87,361 |
Net Sales by Segment (as a percent) | 79.00% | 71.00% | 75.00% |
Gross profit (loss) by Segment | $ 26,647 | $ 20,263 | $ 21,470 |
Gross profit (loss) by Segment (as a percent) | 34.00% | 33.00% | 25.00% |
Total Segment Margin | $ 16,847 | $ 12,010 | $ 12,097 |
Operating segments | Services | |||
SEGMENT REPORTING | |||
Net Sales by Segment | $ 21,009 | $ 24,777 | $ 29,742 |
Net Sales by Segment (as a percent) | 21.00% | 29.00% | 25.00% |
Gross profit (loss) by Segment | $ 6,499 | $ 8,093 | $ 6,398 |
Gross profit (loss) by Segment (as a percent) | 31.00% | 33.00% | 22.00% |
Total Segment Margin | $ 6,499 | $ 8,093 | $ 6,399 |
General and Corporate | |||
SEGMENT REPORTING | |||
General and Corporate | $ (15,102) | $ (19,183) | $ (49,816) |
SEGMENT REPORTING (Schedule of
SEGMENT REPORTING (Schedule of Sales Data by Geographical Area) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
SEGMENT REPORTING | |||
Net Sales by Segment | $ 98,292 | $ 86,512 | $ 117,103 |
Net Sales by Segment (as a percent) | 100.00% | 100.00% | 100.00% |
China | |||
SEGMENT REPORTING | |||
Net Sales by Segment | $ 2,926 | $ 4,021 | $ 9,490 |
Net Sales by Segment (as a percent) | 3.00% | 5.00% | 8.00% |
Japan | |||
SEGMENT REPORTING | |||
Net Sales by Segment | $ 49,185 | $ 45,561 | $ 57,483 |
Net Sales by Segment (as a percent) | 50.00% | 52.00% | 49.00% |
India | |||
SEGMENT REPORTING | |||
Net Sales by Segment | $ 42,352 | $ 33,021 | $ 34,836 |
Net Sales by Segment (as a percent) | 43.00% | 38.00% | 30.00% |
Taiwan | |||
SEGMENT REPORTING | |||
Net Sales by Segment | $ 3,018 | $ 3,217 | $ 7,904 |
Net Sales by Segment (as a percent) | 3.00% | 4.00% | 7.00% |
Other | |||
SEGMENT REPORTING | |||
Net Sales by Segment | $ 811 | $ 692 | $ 7,390 |
Net Sales by Segment (as a percent) | 1.00% | 1.00% | 6.00% |
SEGMENT REPORTING (Schedule o94
SEGMENT REPORTING (Schedule of Long-lived Assets, consisting of Property, Plant and Equipment, by Geographical Area) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
SEGMENT REPORTING | ||
Long-lived assets | $ 1,714 | $ 1,610 |
China | ||
SEGMENT REPORTING | ||
Long-lived assets | 1,369 | 1,357 |
Other | ||
SEGMENT REPORTING | ||
Long-lived assets | $ 345 | $ 253 |
CREDIT RISK AND CONCENTRATION95
CREDIT RISK AND CONCENTRATION (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Concentration Risk | |||
Increase or decrease in interest rates of short-term investments that will not significantly affect the fair value of investment portfolio (as a percent) | 10.00% | ||
Cash, Cash Equivalents and Short Term Investments | Countries Other than US | Credit Concentration Risk | |||
Concentration Risk | |||
Cash and cash equivalents and short-term investments | $ 46 | $ 53.8 | |
Accounts Receivable | Customer Concentration Risk | Softbank and affiliates | |||
Concentration Risk | |||
Concentration of risk (as a percent) | 2.00% | 57.00% | |
Sales Revenue, Net | Customer Concentration Risk | Softbank and affiliates | |||
Concentration Risk | |||
Concentration of risk (as a percent) | 40.00% | 50.00% | 47.00% |
Sales Revenue, Net | Customer Concentration Risk | Bharat Sanchar Nigam Ltd. and affiliates. | |||
Concentration Risk | |||
Concentration of risk (as a percent) | 39.00% | 35.00% | 17.00% |
Sales Revenue, Net | China | Geographic Concentration Risk | |||
Concentration Risk | |||
Concentration of risk (as a percent) | 3.00% | 5.00% | 8.00% |
Subsidiaries | Cash, Cash Equivalents and Short Term Investments | China | Credit Concentration Risk | |||
Concentration Risk | |||
Cash and cash equivalents and short-term investments | $ 7.9 | $ 13.5 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Virtual Gateway Labs, Inc | Tim Ti | |
RELATED PARTY TRANSACTIONS | |
Payments to related party for remuneration for service | $ 0.2 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Events - uSTAR $ in Millions | Mar. 28, 2018USD ($) |
SUBSEQUENT EVENTS | |
Equity interest owned (in percent) | 49.00% |
Capital injection | $ 2.2 |
SCHEDULE I CONDENSED FINANCIA98
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (REGISTRANT BALANCE SHEETS) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
ASSETS | ||
Total assets | $ 187,044 | $ 178,703 |
Current liabilities: | ||
Accounts payable-intercompany | 27,452 | 22,480 |
Total current liabilities | 88,264 | 87,168 |
Total liabilities | 96,052 | 95,962 |
Stockholders' equity: | ||
Ordinary shares: $0.00375 par value; 250,000 authorized shares; 39,363 and 39,009 shares issued at December 31, 2017 and December 31, 2016, respectively; 35,506 and 35,225 shares outstanding at December 31, 2017 and December 31, 2016, respectively | 122 | 122 |
Additional paid-in capital | 1,263,006 | 1,262,005 |
Treasury stock, at cost: 3,857 and 3,784 shares at December 31, 2017 and December 31, 2016, respectively | (8,374) | (8,234) |
Accumulated deficit | (1,226,173) | (1,233,154) |
Accumulated other comprehensive income | 62,411 | 62,002 |
Total stockholders' equity | 90,992 | 82,741 |
Total liabilities and stockholders' equity | 187,044 | 178,703 |
UTSTARCOM HOLDINGS CORP | ||
ASSETS | ||
Investment in subsidiaries | 101,817 | 93,973 |
Total assets | 101,817 | 93,973 |
Current liabilities: | ||
Accounts payable-intercompany | 10,825 | 11,232 |
Total current liabilities | 10,825 | 11,232 |
Total liabilities | 10,825 | 11,232 |
Stockholders' equity: | ||
Ordinary shares: $0.00375 par value; 250,000 authorized shares; 39,363 and 39,009 shares issued at December 31, 2017 and December 31, 2016, respectively; 35,506 and 35,225 shares outstanding at December 31, 2017 and December 31, 2016, respectively | 122 | 122 |
Additional paid-in capital | 1,263,007 | 1,262,005 |
Treasury stock, at cost: 3,857 and 3,784 shares at December 31, 2017 and December 31, 2016, respectively | (8,374) | (8,234) |
Accumulated deficit | (1,226,174) | (1,233,154) |
Accumulated other comprehensive income | 62,411 | 62,002 |
Total stockholders' equity | 90,992 | 82,741 |
Total liabilities and stockholders' equity | $ 101,817 | $ 93,973 |
SCHEDULE I CONDENSED FINANCIA99
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (REGISTRANT BALANCE SHEETS) (Parenthetical) (Details) - $ / shares shares in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Common Stock, Par or Stated Value Per Share | $ 0.00375 | $ 0.00375 |
Ordinary share, authorized shares | 250,000 | 250,000 |
Ordinary share, shares issued | 39,363 | 39,009 |
Ordinary share, shares outstanding | 35,506 | 35,225 |
Treasury shares | 3,857 | 3,784 |
UTSTARCOM HOLDINGS CORP | ||
Common Stock, Par or Stated Value Per Share | $ 0.00375 | $ 0.00375 |
Ordinary share, authorized shares | 250,000 | 250,000 |
Ordinary share, shares issued | 39,363 | 39,009 |
Ordinary share, shares outstanding | 35,506 | 35,225 |
Treasury shares | 3,857 | 3,784 |
SCHEDULE I CONDENSED FINANCI100
SCHEDULE I CONDENSED FINANCIAL INFORMATION OF REGISTRANT (RESULTS OF OPERATIONS ) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Financial Statements | |||
Gross profit | $ 33,146 | $ 28,356 | $ 27,868 |
Operating expenses: | |||
Selling, general and administrative | 16,777 | 18,146 | 21,515 |
Research and development | 9,853 | 8,502 | 11,342 |
Total operating expenses | 26,630 | 26,648 | 32,857 |
Operating loss | 6,516 | 1,708 | (4,989) |
Interest income | 1,177 | 871 | 557 |
Interest expense | (48) | (55) | (76) |
Other income, net | 2,976 | 2,748 | 3,489 |
Equity in net income (loss) of affiliated companies | (687) | 984 | (13,954) |
Income tax benefit (expense) | 1,263 | 788 | (4,162) |
Net income (loss) attributable to UTStarcom Holdings Corp. | 6,981 | 290 | (27,158) |
UTSTARCOM HOLDINGS CORP | |||
Operating expenses: | |||
Selling, general and administrative | 852 | 671 | 928 |
Total operating expenses | 852 | 671 | 928 |
Operating loss | (852) | (671) | (928) |
Loss before income taxes and equity in loss of affiliated companies | (852) | (671) | (928) |
Equity in net income (loss) of affiliated companies | 7,833 | 803 | (26,230) |
Net income (loss) attributable to UTStarcom Holdings Corp. | $ 6,981 | $ 132 | $ (27,158) |
SCHEDULE II VALUATION AND QU101
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in valuation and qualifying accounts | |||
Removal of tax valuation allowance for expiration of net operating loss carryforwards | $ 3,000 | ||
Removal of tax valuation allowance for Utilization of foreign tax credits | 27,000 | ||
Allowance for doubtful accounts | |||
Changes in valuation and qualifying accounts | |||
Balance at beginning of period | $ 2,339 | $ 4,564 | 10,877 |
Charged (credited) to costs and expenses | (56) | 1,564 | 103 |
Credited to other accounts | 154 | ||
(Deductions) Adjustments | (3,789) | (6,416) | |
Balance at end of period | 2,437 | 2,339 | 4,564 |
Tax valuation allowance | |||
Changes in valuation and qualifying accounts | |||
Balance at beginning of period | 329,523 | 328,397 | 368,672 |
Charged (credited) to costs and expenses | 6,162 | (3,016) | (11,090) |
Credited to other accounts | 4,142 | (29,185) | |
(Deductions) Adjustments | (99,353) | ||
Balance at end of period | $ 236,332 | $ 329,523 | $ 328,397 |