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UTStarcom Releases Financial Results for the Third Quarter of 2010

November 3, 2010

BEIJING, Nov. 3, 2010 /PRNewswire-Asia-FirstCall/ — UTStarcom, Inc. (“UTStarcom” or “the Company”) (Nasdaq: UTSI), a leader in IP-based network solutions for IPTV, Internet TV and Broadband operators in the cable and telecom sectors, today reported financial results for the third quarter ended September 30, 2010.

“While the third quarter financial results show that we have to work harder to reach profitability and become cash flow positive, the three strategy shifts we recently announced point the way for a logical evolution of UTStarcom’s business,” said Jack Lu, President and CEO of UTStarcom. “With a transition in the top management and early stage operational achievements in China’s cable markets, the third quarter of 2010 was an important one for UTStarcom. We are laying the foundation for new revenues that we expect to be recurring and have higher margin than the current broadband and multimedia equipment-based business.”

Third quarter 2010 Financial Results

Net sales for the third quarter of 2010 were $61.4 million, which decreased 12.9% or $9.1 million as compared to $70.5 million in the third quarter of 2009.

Gross margin for the third quarter of 2010 was 19.7% as compared to 34.3% in the third quarter of 2009, which included the following significant items: $8.5 million in additional inventory reserve, $1.9 million value added tax provision and $5.8 million decrease in cost of sales resulting from the reversal of an accrued liability for third party commissions. Gross profit was $12.1 million in the third quarter of 2010 compared to $24.2 million in the corresponding period of 2009.

Third quarter 2010 GAAP operating expenses were $35.4 million compared to $58.0 million same period of 2009.

The GAAP net loss attributable to UTStarcom for the third quarter of 2010 was $17.2 million, or a loss of $0.13 per share, as compared to a loss of $34.6 million, or loss of $0.27 per share in the third quarter of 2009.

Net cash, cash equivalents and short-term investments as of September 30, 2010 was $338 million compared to $308 million and $266.9 million on June 30, 2010 and December 31, 2009 respectively.

Non-GAAP Results

To enable a comparison of the financial results for the Company on a year-over-year basis the Company has prepared certain non-GAAP results which present the Company’s results as if both the divestiture of PCD and the wind-down of the Company’s Korea-based handset operations were completed as of the beginning of the earliest time-period presented.

The third quarter of 2010 non-GAAP revenue was $61 million, non-GAAP gross margin was 20% and non-GAAP operating loss was $23 million. This compares to the third quarter of 2009 non-GAAP revenue of $63 million, non-GAAP gross margin of 35% and non-GAAP operating loss of $35 million.

Third Quarter 2010 Operational Achievements

  • the Company successfully closed the Beijing E-town International Investment and Development Co., Ltd. (BEIID) investment
  • new management team, including President and CEO, Jack Lu and three new members of the board of directors formally assumed their roles
  • the Company won a project with Jinan City’s Cable Network as the exclusive broadband solution provider
  • the Company won IPTV projects with operators in Sichuan (already announced), Hubei (new), Henan (new) and Shenzhen (new)
  • the Company expanded a previously established revenue sharing relationship with South Media Interactive Co., Ltd, the interactive business unit of South Media Group, to add HDTV options to their IDTV offering, be responsible for the development of interactive products and provide operational support services to the platform
  • the Company announced a strategic partnership with a company controlled by a national level broadcaster to provide technology and operational support for Internet TV service in China and abroad
  • the Company improved net cash used in operating activities from ($40.8M) million in the second quarter of 2010 to ($12.4) million in the third quarter of 2010.

Conference Call

The Company will host a conference call to discuss the company’s financial results for the third quarter of 2010 before market open on Wednesday, November 3, 2010.

The call will take place at 5:00 a.m. (PT) / 8:00 a.m. (ET) / 8:00 p.m. China time on Wednesday November 3, 2010.

The conference call dial-in numbers are as follows: United States — 877-405-3429; International – 702-928-6906. The conference ID number is 2111-8237.

A replay of the call will be available for 7 days. The conference call replay numbers are as follows: United States — 800-642-1687; International — 706-645-9291.

The Conference ID for accessing the recording is 2111-8237.

Investors will also have the opportunity to listen to the conference call and the replay over the Internet through the investor relations section of UTStarcom’s Web site at: http://www.utstar.com.

To listen to the live call, please go to the Web site at least 15 minutes early to register, and to download and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will also be available on this site.

About UTStarcom, Inc.

UTStarcom is a leader in IP-based network solutions for IPTV, Internet TV and Broadband operators in the cable and telecom sectors. The Company sells its solutions to operators in both emerging and established telecommunications and cable markets around the world. UTStarcom enables its customers to rapidly deploy revenue-generating access services using their existing infrastructure, while providing a migration path to cost-efficient, end-to-end IP networks.

Founded in 1991, listed in NASDAQ in 2000, the Company has its operational headquarters in Beijing, China and research and development operations in China and India. For more information about UTStarcom, visit the Company’s Web site at http://www.utstar.com.

Discussion of Non-GAAP Financial Measures

In this earnings release, UTStarcom refers to certain non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A reconciliation between non-GAAP and GAAP measures can be found in the accompanying tables. UTStarcom believes that, while these non-GAAP measures are not a substitute for GAAP results, they provide a basis for evaluating the Company’s planning and forecasting of future periods. These non-GAAP measures have been reconciled to the nearest GAAP measure as required under Securities and Exchange Commission rules.

On July 1, 2008, the Company divested its Personal Communications Division (“PCD”) which has historically represented a significant portion of the Company’s revenues. In the fourth quarter of 2008, the Company announced actions to wind down its Korea-based handset manufacturing operations. To enable a comparison of the financial results for the Company on a year-over-year and a quarter-over-quarter basis the Company has prepared certain non-GAAP results which present the Company’s results as if both the divestiture of PCD and the wind down of the Company’s Korea-based handset operations were completed prior to each time period presented. The reconciliation between GAAP and these non-GAAP financial measures is provided at the end of this press release and on the Company’s website.

Forward-Looking Statements

This release includes forward-looking statements, including statements regarding the Company’s three strategy shifts and the foundation for future revenues and the margin associated with those revenue. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially. These include risks and uncertainties regard the ability of the Company to realize anticipated results of operational improvements, the Company’s ability to close certain investments related to its strategic partnership, revenues under its new business model, successfully transitioning to a new management team and headquarters location, executing on its business plan and managing regulatory matters as well as risk factors identified in its latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as filed with the Securities and Exchange Commission. The Company is in a period of significant transition and in the conduct of its business is exposed to additional risks as a result. All forward-looking statements included in this release are based upon information available to the Company as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statement.


                                   UTStarcom, Inc.
                        Condensed Consolidated Balance Sheets
                                   (in thousands)
                                     (Unaudited)


                                            September 30,  December 31,
                                                      2010          2009
                                                      ----          ----
                       ASSETS
    Current assets:
      Cash, cash equivalents and short-term
       investments                                $337,998      $266,881
      Accounts and notes receivable, net            42,093        43,773
      Inventories and deferred costs               174,397       202,753
      Prepaids and other current assets             69,730        74,354
        Total current assets                       624,218       587,761
    Long-term assets:
      Property, plant and equipment, net             4,810       130,612
      Long-term deferred costs                     152,562       184,978
      Other long-term assets                        29,394        25,760
        Total assets                              $810,984      $929,111
                                                  ========      ========

               LIABILITIES AND EQUITY
    Current liabilities:
      Accounts payable                             $29,724       $54,115
      Customer advances                             86,450       120,364
      Deferred revenue                             181,785       170,777
      Other current liabilities                     87,250       147,914
                                                    ------       -------
        Total current liabilities                  385,209       493,170
    Long-term liabilities:
      Long-term deferred revenue and other
       liabilities                                 172,467       179,790
                                                   -------       -------
        Total liabilities                          557,676       672,960

    Total equity                                   253,308       256,151
                                                   -------       -------
        Total liabilities and equity              $810,984      $929,111
                                                  ========      ========


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


                                 Three months
                                    ended            Nine months ended
                                September 30,          September 30,
                                2010           2009      2010            2009
                                ----           ----      ----            ----

    Net sales                $61,394        $70,504  $215,406        $270,007
    Cost of net sales         49,301         46,315   153,232         240,004
    Gross profit              12,093         24,189    62,174          30,003
                              ------         ------    ------          ------
                                 20 %           34 %      29 %            11 %
    Operating expenses:
      Selling, general and
       administrative         24,530         33,139    75,882         114,290
      Research and
       development             9,922         14,246    29,023          51,983
      Restructuring            2,336          8,909     9,627          41,485
      Net (Gain) loss on
       divestiture            (1,436)         1,689    (5,244)            332
    Total operating
     expenses                 35,352         57,983   109,288         208,090
                              ------         ------   -------         -------

    Operating loss           (23,259)       (33,794)  (47,114)       (178,087)
                             -------        -------   -------        --------

    Interest income, net         524            438     1,184           1,266
    Other income (expense),
     net                       6,967         (1,556)    7,067          (3,341)
    Loss before income
     taxes                   (15,768)       (34,912)  (38,863)       (180,162)
    Income taxes benefit
     (expense)                (1,400)           317    (3,243)         (6,166)
    Net loss                 (17,168)       (34,595)  (42,106)       (186,328)

    Net (income) loss
     attributable to
     noncontrolling
     interest                     (4)            15         6              32
    Net loss attributable
     to UTStarcom, Inc.     $(17,172)      $(34,580) $(42,100)      $(186,296)
                            ========       ========  ========       =========

    Net loss per share
     attributable to
     UTStarcom, Inc. -
     Basic and Diluted        $(0.13)        $(0.27)   $(0.32)         $(1.47)

    Weighted average shares
     used in per share
     calculation:
    Basic and Diluted        135,550        127,875   131,781         126,930
                             =======        =======   =======         =======


                                  UTStarcom, Inc.
                  Condensed Consolidated Statements of Cash Flows
                                    (Unaudited)


                                                                   Three
                                                   Three months    months
                                                       ended       ended
                                                   ------------    -----
                                                  September 30,  June 30,
                                                  -------------  --------
                                                           2010        2010
                                                           ----        ----
                                                        (In         (In
                                                    thousands)   thousands)
     CASH FLOWS FROM OPERATING ACTIVITIES:
            Net cash used in operating activities       (12,441)    (40,849)
                                                        -------     -------

     CASH FLOWS FROM INVESTING ACTIVITIES:
         Additions to property, plant and
          equipment                                        (790)     (1,356)
         Net proceeds from divestitures                   1,348           -
         Proceeds from sale of building (net
          of tax payments)                                    -     117,372
         Change in restricted cash                        4,381      (1,997)
         Proceeds from settlement of an
          investment interest                                 -          59
         Purchase of an investment interest                   -          13
         Purchase of short-term investments              (2,750)     (4,150)
         Proceeds from sale of short-term
          investments                                     2,410       2,151
         Other                                             (639)        157
            Net cash provided by investing
             activities                                   3,960     112,249
                                                          -----     -------

     CASH FLOWS FROM FINANCING ACTIVITIES:
         Insurance of stock and option, net of
          expense                                        34,587           -
         Repurchase of common stock                         (21)         (5)
                                                            ---         ---
            Net cash provided by (used in)
             financing activities                        34,566          (5)
     Effect of exchange rate changes on
      cash and cash equivalents                           4,100       1,005
                                                          -----       -----
            Net increase in cash and cash
             equivalents                                 30,185      72,400
     Cash and cash equivalents at
      beginning of period                               306,841     234,441
     Cash and cash equivalents at end of
      period                                           $337,026    $306,841
                                                       ========    ========


                              UTStarcom, Inc.
              Condensed Consolidated Statements of Cash Flows
                                (Unaudited)


                                                     Nine months ended
                                                     -----------------
                                                       September 30,
                                                       -------------
                                                       2010          2009
                                                       ----          ----
                                                       (In thousands)
     Net cash used in operating activities          (97,405)     (89,202)
                                                    -------       -------

    Cash flows from investing activities:
         Additions to property, plant and
          equipment                                  (2,616)       (1,651)
         Net proceeds from divestitures               2,848        11,508
         Proceeds from sale of building (net of
          tax payments)                             123,955             -
         Change in restricted cash                    7,379         1,895
         Proceeds from settlement of an investment
          interest                                      481         1,600
         Purchase of an investment interest            (550)            -
         Purchase of short-term investments         (12,002)       (6,514)
         Proceeds from sale of short-term
          investments                                 7,825         7,625
         Other                                          332           437
     Net cash provided by investing activities      127,652        14,900
                                                    -------        ------

    Cash flows from financing activities:
         Issuance of stock, net of expense           34,594           367
         Repurchase of common stock                     (58)            -
         Other                                            -          (755)
                                                        ---          ----
     Net cash provided by (used in) financing
      activities                                     34,536          (388)
     Effect of exchange rate changes on cash
      and cash equivalents                            6,400         2,199
                                                      -----         -----
     Net increase (decrease) in cash and cash
      equivalents                                    71,183      (72,491)
     Cash and cash equivalents at beginning of
      period                                        265,843       309,603
     Cash and cash equivalents at end of
      period                                       $337,026      $237,112
                                                   ========      ========


      UTSTARCOM, INC.
      Nov 3, 2010 Conference Call

      RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE
      ($ in millions)

      (Unaudited)

      To supplement our condensed consolidated financial statements
      presented on a GAAP basis, UTStarcom uses certain non-GAAP measures
      which are adjusted to present those metrics as if both PCD had been
      divested and the Korea handsets business had been wound down prior
      to each time period reflected below.  We believe this enables year
      over year comparisons to our recent financial results.  These
      adjustments to our GAAP results are made with the intent of
      providing both management and investors a more complete
      understanding of UTStarcom's underlying results and trends.  In
      addition, these adjusted  non-GAAP results are among the
      information management uses as a basis for our planning and
      forecasting of future periods.  The presentation of this additional
      information is not meant to be considered in isolation or as a
      substitute for results prepared in accordance with generally
      accepted accounting principles in the United States.


                                         Qtr       Qtr       Qtr       Qtr
                                       ended     ended     ended     ended
                                     31-Mar-   30-Jun-   30-Sep-   31-Dec-
                                          09        09        09        09
                                    --------  --------  --------  --------
    GAAP Revenue (a)                    $119       $80       $71      $116

    Less: PCD Segment Revenue (b)          -         -         -         -

    Less: Korea Handset Sales to
     PCD (c)                              39        (3)        8        12

    Non-GAAP Revenue                     $80       $83       $63      $104
                                         ===       ===       ===      ====


                                         Year       Qtr       Qtr       Qtr
                                        ended     ended     ended     ended
                                                31-Mar-   30-Jun-   30-Sep-
                                    31-Dec-09        10        10        10
                                    ---------  --------  --------  --------
    GAAP Revenue (a)                     $386       $81       $73       $61

    Less: PCD Segment Revenue (b)           -         -         -         -

    Less: Korea Handset Sales to
     PCD (c)                               56         3         -         -

    Non-GAAP Revenue                     $330       $78       $73       $61
                                         ====       ===       ===       ===


    (a) GAAP Revenue for each period is the consolidated revenue as
    reported on Form 10-Q or Form 10-K, as applicable, for such period,
    except for the consolidated revenue for the quarters ended December
    31, 2008 and 2009, which is derived from the revenue reported in the
    Form 10-Qs and Form 10-K with respect to fiscal years 2008 and 2009.

    (b) Effective July 1, 2008 the PCD segment was divested by the Company.

    (c) Prior to the July 1, 2008 divestiture of PCD, Korea handset did
    not record revenue for units shipped to PCD as this activity was an
    intercompany transfer.
    After July 1, 2008 this activity was recorded as a third party sale
    in the Handset segment.


    UTSTARCOM, INC.
    Nov 3, 2010 Conference Call

    RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT
    ($ in millions)
    (Unaudited)

    To supplement our condensed consolidated financial statements
    presented on a GAAP basis, UTStarcom uses certain non-GAAP measures
    which are adjusted to present those metrics as if both PCD had been
    divested and the Korea handsets business had been wound down prior
    to each time period reflected below.  We believe this enables year
    over year comparisons to our recent financial results.  These
    adjustments to our GAAP results are made with the intent of
    providing both management and investors a more complete
    understanding of UTStarcom's underlying results and trends.  In
    addition, these adjusted non-GAAP results are among the information
    management uses as a basis for our planning and forecasting of
    future periods.  The presentation of this additional information is
    not meant to be considered in isolation or as a substitute for
    results prepared in accordance with generally accepted accounting
    principles in the United States.


               Qtr    Qtr      Qtr      Qtr       Year    Qtr    Qtr      Qtr
             ended  ended    ended    ended      ended  ended  ended    ended
               31-    30-                                 31-    30-
              Mar-   Jun-  30-Sep-  31-Dec-              Mar-   Jun-  30-Sep-
                09     09       09       09  31-Dec-09     10     10       10
              ----   ----   -------  ------- ---------   ----   ----   -------
    GAAP
     Gross
     Profit
     (a)       $22   ($16)     $24      $35        $65    $27    $23      $12
    GAAP
     Gross
     Margin
     %          18%  (20%)      34%      30%        17%    34%    32%      20%

    Less:
     PCD
     Segment
     Gross
     Profit
     (b)         -      -        -        -          -      0      0        -

    Less:
     Korea
     Handset
     Gross
     Profit
     from
     Sales
     to
     PCD
     (c)         3    (28)       2        2        (21)     1      1       (1)

    Non-
     GAAP
     Gross
     Profit    $19    $12      $22      $33        $86    $26    $22      $13
               ===    ===      ===      ===        ===    ===    ===      ===
    Non-
     GAAP
     Gross
     Margin
     %          24%    14%      35%      32%        26%    33%    30%      20%


    (a) GAAP Gross Profit and GAAP Gross Margin % for each period is the
    consolidated gross profit and gross margin % as reported on Form
    10-Q or Form 10-K, as applicable, for such period,
    except for the consolidated gross profit and gross margin % for the
    quarter ended December 31, 2008 and 2009, which is derived from the
    gross profit and gross margin % reported in the
    Form 10-Qs and Form 10-K with respect to fiscal years 2008 and 2009.

    (b) Effective July 1, 2008 the PCD segment was divested by the Company.

    (c) Prior to the July 1, 2008 divestiture of PCD, Korea handset
    earned a gross profit on the intercompany transfer of inventory to
    PCD.
    This gross profit was recorded in the Handset segment.  After July 1,
    2008 this activity was recorded as a third party transaction.


      UTSTARCOM, INC.
      Nov 3, 2010 Conference Call

      RECONCILIATION OF GAAP OPERATING EXPENSE TO NON-GAAP OPERATING EXPENSE
      ($ in millions)
      (Unaudited)

      To supplement our condensed consolidated financial statements
      presented on a GAAP basis, UTStarcom uses certain non-GAAP measures
      which are adjusted to present those metrics as if both PCD had been
      divested and the Korea handsets business had been wound down prior
      to each time period reflected below.  We believe this enables year
      over year comparisons to our recent financial results.  These
      adjustments to our GAAP results are made with the intent of
      providing both management and investors a more complete
      understanding of UTStarcom's underlying results and trends.  In
      addition, these adjusted non-GAAP results are among the information
      management uses as a basis for our planning and forecasting of
      future periods.  The presentation of this additional information is
      not meant to be considered in isolation or as a substitute for
      results prepared in accordance with generally accepted accounting
      principles in the United States.


                                  Qtr ended Qtr ended Qtr ended Qtr ended
                                  31-Mar-09 30-Jun-09 30-Sep-09 31-Dec-09
                                  --------- --------- --------- ---------
    GAAP Operating Expense (a)          $81       $70       $58       $76

    Less: PCD Operating Expense
     (b)                                  -         -         -         -

    Less: Korea Handset Operating
     Expense (c)                          3         2         1         -

    Non-GAAP Operating Expense          $78       $68       $57       $76
                                        ===       ===       ===       ===


                                  Year ended Qtr ended Qtr ended Qtr ended
                                   31-Dec-09 31-Mar-10 30-Jun-10 30-Sep-10
                                   --------- --------- --------- ---------
    GAAP Operating Expense (a)          $285       $46       $28       $35

    Less: PCD Operating Expense
     (b)                                   -         -         -         -

    Less: Korea Handset Operating
     Expense (c)                           6         -         -         -

    Non-GAAP Operating Expense          $279       $46       $28       $35
                                        ====       ===       ===       ===


    (a) GAAP Operating Expense for each period is the consolidated
    operating expense as reported on Form 10-Q or Form 10-K, as
    applicable, for such period,
      except for the consolidated operating expense for the quarter ended
      December 31, 2008 and 2009, which is derived from the operating
      expenses reported in the
    Form 10-Qs and Form 10-K with respect to the fiscal years 2008 and 2009.

    (b) Effective July 1, 2008 the PCD segment was divested by the Company.

    (c) Both prior to and after the July 1, 2008 divestiture of PCD, all
    direct operating expense relating to Korea handset has been recorded
    in the Handset segment.


      UTSTARCOM, INC.
      Nov 3, 2010 Conference Call

      RECONCILIATION OF GAAP OPERATING LOSS TO  NON-GAAP OPERATING LOSS
      ($ in millions)
      (Unaudited)

      To supplement our condensed consolidated financial statements
      presented on a GAAP basis, UTStarcom uses certain non-GAAP measures
      which are adjusted to present those metrics as if both PCD had been
      divested and the Korea handsets business had been wound down prior
      to each time period reflected below.  We believe this enables year
      over year comparisons to our recent financial results.  These
      adjustments to our GAAP results are made with the intent of
      providing both management and investors a more complete
      understanding of UTStarcom's underlying results and trends.  In
      addition, these adjusted non-GAAP results are among the information
      management uses as a basis for our planning and forecasting of
      future periods.  The presentation of this additional information is
      not meant to be considered in isolation or as a substitute for
      results prepared in accordance with generally accepted accounting
      principles in the United States.


                      Qtr   Qtr     Qtr     Qtr    Year   Qtr   Qtr     Qtr
                    ended ended   ended   ended   ended ended ended   ended
                      31-   30-                           31-  30-
                     Mar-  Jun- 30-Sep- 31-Dec- 31-Dec-  Mar-  Jun- 30-Sep-
                       09    09      09      09      09    10    10      10
                     ----  ----  ------- ------- ------- ----  ----  -------
    GAAP Operating
     Loss (a)        ($59) ($85)   ($34)   ($41)  ($219) ($19)  ($5)   ($23)

    Less:  PCD
     Operating
     Profit (b)         -     -       -       -       -     0     -       -

    Less: Korea
     Handset
     Operating
     Income (Loss)
     (c)                -   (30)      1       2     (27)    1     1      (1)

    Non-GAAP
     Operating Loss  ($59) ($55)   ($35)   ($43)  ($192) ($20)  ($6)   ($24)
                     ====  ====    ====    ====   =====  ====   ===    ====


    (a)  GAAP Operating Loss for each period is the consolidated
    operating loss as reported on Form 10-Q or Form 10-K, as applicable,
    for such period, except for the
    consolidated operating loss for the quarter ended December 31,  2008
    and 2009, which is derived from the operating loss reported in the
    Form 10-Qs and Form 10-K
    with respect to fiscal years 2008 and 2009.

    (b) Effective July 1, 2008 the PCD segment was divested by the Company.

    (c) Both prior to and after the July 1, 2008 divestiture of PCD, the
    operating loss relating to Korea handset has been recorded in the
    Handset segment.


      UTSTARCOM, INC.
      Nov 3, 2010 Conference Call

      ABBREVIATED NON-GAAP P&L STATEMENT (a)
      ($ in millions)
      (Unaudited)

      To supplement our condensed consolidated financial statements
      presented on a GAAP basis, UTStarcom uses certain non-GAAP measures
      which are adjusted to present those metrics as if both PCD had been
      divested and the Korea handsets business had been wound down prior
      to each time period reflected below.  We believe this enables year
      over year comparisons to our recent financial results.  These
      adjustments to our GAAP results are made with the intent of
      providing both management and investors a more complete
      understanding of UTStarcom's underlying results and trends.  In
      addition, these adjusted non-GAAP results are among the information
      management uses as a basis for our planning and forecasting of
      future periods.  The presentation of this additional information is
      not meant to be considered in isolation or as a substitute for
      results prepared in accordance with generally accepted accounting
      principles in the United States.


                               Qtr ended  Qtr ended  Qtr ended  Qtr ended
                               31-Mar-09  30-Jun-09  30-Sep-09  31-Dec-09
                               ---------  ---------  ---------  ---------
    Non-GAAP Revenue                 $80        $83        $63       $104

    Non-GAAP Gross Profit             19         12         22         33
    Non-GAAP Gross Margin %          24%        14%        35%        32%

    Non-GAAP Operating Expense        78         68         57         76

    Non-GAAP Operating Loss         ($59)      ($55)      ($35)      ($43)
                                    ====       ====       ====       ====


                               Year ended  Qtr ended  Qtr ended  Qtr ended
                                31-Dec-09  31-Mar-10  30-Jun-10  30-Sep-10
                                ---------  ---------  ---------  ---------
    Non-GAAP Revenue                 $330        $78        $73        $61

    Non-GAAP Gross Profit              86         26         22         13
    Non-GAAP Gross Margin %           26%        33%        30%        20%

    Non-GAAP Operating Expense        279         46         28         35

    Non-GAAP Operating Loss         ($192)       (20)       ($6)      ($24)
                                    =====        ===        ===       ====


    (a) Please refer to the preceding reconciliation tables for the
    adjustments to GAAP Revenue, Gross Profit, Operating Expense and
    Operating Loss.

SOURCE UTStarcom, Inc.


Source: newswire



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