2008-08-06 15:16:00
UTStarcom Releases Financial Results for the Second Quarter of 2008
Second Quarter 2008 Total Revenues of $633 Million
ALAMEDA, Calif., Aug. 6 /EMWNews/ -- UTStarcom, Inc.
(Nasdaq: UTSI), today reported financial results for the second quarter of
2008. Net sales for the second quarter of 2008 were $633 million as
compared to $538 million in the second quarter of 2007 representing an 18%
increase. The Personal Communications Division ("PCD") revenues for the
second quarter of 2008 were $449 million as compared to $358 million in the
second quarter of 2007. Gross margins for the second quarter of 2008 were
13.0% as compared to 14.8% in the second quarter of 2007. The operating
loss for the second quarter of 2008 was $31.1 million as compared to an
operating loss of $55.3 million in the second quarter of 2007. This
improvement was primarily due to a $22 million reduction in operating
expenses. The net loss for the second quarter of 2008 was $38.8 million, or
($0.31) per share, as compared to a net loss of $61.7 million, or ($0.51)
per share in the second quarter of 2007.
Cash, cash equivalents and short term investments were $255 million at
quarter end, while the total debt was $29 million. These balance sheet
items do not include the proceeds received from completing the divestiture
of PCD on July 1, 2008. On July 1, the company closed the divestiture of
PCD for expected proceeds of approximately $240 million subject to certain
adjustments. Of this amount, the company received approximately $216
million in cash with the balance of approximately $24 million held in
escrow accounts.
"In the second quarter we continued to execute on the strategic plan
laid out in late 2007. We recently closed a significant divestiture which
provides us with the liquidity to execute the next phase of that plan.
Strategically, we are now focused primarily on delivering IP-based products
to the world's fastest growing economies," said Peter Blackmore,
UTStarcom's chief executive officer and president. "We are also taking
further action to adjust the operating model of the company consistent with
our new structure. The results of these efforts will become evident as we
move forward in late 2008 and into 2009."
Q3 2008 Guidance
Given the recent changes to the company's structure, management will
provide third quarter financial guidance during the conference call.
Conference Call
The company will host a conference call to discuss the results. The
call will take place at 2:00 p.m. (PDT) / 5:00 p.m. (EDT) on August 6,
2008. The conference call dial-in numbers are as follows: United States /
Canada -- 877- 405-9548; International -- 706-679-7496. The conference ID
number is 5823- 3299.
A replay of the call will be available for 30 days. The conference call
replay numbers are as follows: United States / Canada -- 800-642-1687;
International -- 706-645-9291. The Access Code is 5823-3299.
Investors will also have the opportunity to listen to the conference
call and the replay over the Internet through the investor relations
section of UTStarcom's Web site at: http://www.utstar.com.
To listen to the live call, please go to the Web site at least 15
minutes early to register, and to download and install any necessary audio
software. For those who cannot listen to the live broadcast, a replay will
also be available on this site.
About UTStarcom, Inc.
UTStarcom is a global leader in IP-based, end-to-end networking
solutions and international service and support. The company develops,
manufactures and markets its broadband, wireless, and terminal solutions to
network operators in both emerging and established telecommunications
markets worldwide. UTStarcom enables its customers to rapidly deploy
revenue-generating access services using their existing infrastructure,
while providing a migration path to cost-efficient, end-to-end IP networks.
UTStarcom was founded in 1991 and is headquartered in Alameda, California.
The company has research and development centers in the USA, Canada, China,
Korea and India.
For more information about UTStarcom, please visit the UTStarcom Web
site at http://www.utstar.com.
Forward-Looking Statements
This release includes forward-looking statements, including the
foregoing statements regarding the company's plans to adjust its operating
model and expectations with respect to anticipated future results. These
statements are forward-looking in nature and subject to risks and
uncertainties that may cause actual results to differ materially. These
risks include the ability of the company to realize anticipated results of
operational improvements and execute on its liquidity plans as well as risk
factors identified in its latest Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as filed with the
Securities and Exchange Commission.
UTStarcom, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(Unaudited)
June 30, December 31,
2008 2007
ASSETS
Current assets:
Cash, cash equivalents and short-term
investments $254,790 $503,078
Accounts and notes receivable, net 153,445 343,525
Inventories and deferred costs 342,958 524,727
Assets held for sale 373,929 -
Prepaids and other current assets 139,187 121,636
Total current assets 1,264,309 1,492,966
Long-term assets:
Property, plant and equipment, net 207,259 209,094
Long-term deferred costs 161,919 164,766
Other long-term assets 102,089 117,762
Total assets $1,735,576 $1,984,588
LIABILITIES, MINORITY INTEREST AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $179,984 $148,440
Short-term debt 29,158 322,829
Customer advances 192,331 229,050
Deferred revenue 111,219 100,502
Liabilities held for sale 154,953 -
Other current liabilities 230,933 302,395
Total current liabilities 898,578 1,103,216
Long-term liabilities:
Long-term debt - 333
Long-term deferred revenue and other
liabilities 248,365 259,358
Total liabilities 1,146,943 1,362,907
Minority interest in consolidated
subsidiaries 796 3,705
Total stockholders' equity 587,837 617,976
Total liabilities, minority interest
and stockholders' equity $1,735,576 $1,984,588
UTStarcom, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
Net sales $632,756 $538,245 $1,218,745 $1,014,146
Cost of net sales 550,808 458,515 1,044,718 859,132
Gross profit 81,948 79,730 174,027 155,014
Operating expenses:
Selling, general and
administrative 72,010 88,865 151,754 168,701
Research and development 39,286 42,158 80,686 85,819
Amortization of intangible
assets 1,730 4,046 3,554 8,092
Total operating expenses 113,026 135,069 235,994 262,612
Operating loss (31,078) (55,339) (61,967) (107,598)
Interest expense, net (2,167) (3,926) (5,421) (5,742)
Other income (expense), net (920) 158 53,050 4,129
Loss before income taxes and
minority interest (34,165) (59,107) (14,338) (109,211)
Income taxes (4,625) (3,298) 395 (7,640)
Minority interest in losses of
consolidated subsidiaries 10 698 520 1,161
Net loss $(38,780) $(61,707) $(13,423) $(115,690)
Loss per share - Basic and
diluted $(0.31) $(0.51) $(0.11) $(0.96)
Weighted average shares used
in per share calculation:
- Basic and diluted 123,119 120,982 122,608 120,941
UTStarcom, Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Six months ended June 30,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(13,423) $(115,690)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 19,904 29,737
Gain on sale of investments and
liquidation of ownership interest in a
variable interest entity (48,375) (366)
Net gain on sale of fixed assets (85) (2,629)
Stock-based compensation expense 9,844 4,939
Provision for doubtful accounts 2,722 2,370
Provision for (recovery of) deferred
costs 9,089 (8,136)
Deferred income taxes (11,541) 1,267
Other 2,185 (366)
Changes in operating assets and
liabilities:
Accounts receivable 65,081 84,696
Inventories (69,513) (19,369)
Deferred costs 42,747 31,563
Other assets (5,513) (28,637)
Accounts payable 116,453 (89,502)
Income taxes payable 3,800 6,801
Customer advances (16,503) 27,141
Deferred revenue (7,025) (23,982)
Other current liabilities (39,986) (49,135)
Net cash provided by (used in)
operating activities 59,861 (149,298)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (10,271) (15,425)
(Purchase of) proceeds from the
disposition of an investment interest (2,244) 1,800
Proceeds from repayment of loan by a
variable interest entity 7,728 -
Change in restricted cash (6,506) 6,615
Purchase of short-term investments (8,567) (21,735)
Proceeds from sale of short-term
investments 66,580 13,484
Other 143 (230)
Net cash provided by (used in)
investing activities 46,863 (15,491)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings 50,000 64,621
Payments on borrowings (346,017) (64,732)
Other (3,637) 4,728
Net cash (used in) provided by
financing activities (299,654) 4,617
Effect of exchange rate changes on
cash and cash equivalents 9,382 7,972
Net decrease in cash and cash
equivalents (183,548) (152,200)
Cash and cash equivalents at beginning
of period 437,449 661,623
Cash and cash equivalents at end of
period $253,901 $509,423
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