ALAMEDA, Calif., Nov. 9 /PRNewswire-FirstCall/ -- UTStarcom, Inc. , a global leader in IP-based, end-to-end networking solutions and services, today reported financial results for the third quarter of 2007.
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Net sales for the third quarter 2007 were $646 million. This $108 million increase over the second quarter of 2007 was driven by strong sales in PCD as well as growth in our Broadband and Wireless business units. Gross margins for the third quarter of 2007 were 10%. The gross margins percentage was impacted by a much larger percentage of PCD sales, as well as approximately $10 million of inventory reserves. The net loss for the third quarter was $55 million, or a loss of ($0.46) per share. This compares to a loss of $62 million in the second quarter of 2007 and $43 million in the third quarter of 2006.
Our third quarter cash and short term investments totaled $644 million, an increase of $116 million from the second quarter of 2007. For this quarter, cash and short term investments include approximately $115 million of investments that were previously accounted for as long term equity investments.
"Our third quarter results do not yet reflect the benefits of changes we are in the process of implementing in UTStarcom," stated Peter Blackmore, Chief Operations Officer of UTStarcom, Inc.
"We have strong technology in IP communications and are building momentum in IPTV, NGN and optical infrastructure and access devices. Management has a high sense of urgency about improving the operational capabilities of the company to ensure profitable growth. Our conference call will give details about our progress on this."
Guidance for the fourth quarter of 2007 -- Revenue flat to slightly up compared to third quarter 2007 -- Gross margins up 2 to 4 points from third quarter 2007 -- Operating expenses (excluding any special charges) down sequentially Conference Call Details
The Company will host a conference call to discuss the third quarter 2007 results. The call will take place at 5:30 a.m. (PST)/ 8:30 a.m. (EST) on Monday, November 12. The conference call dial-in numbers are as follows: United States -- 888-398-3046; International -- 706-902-1962. The conference ID number is 24062138.
A replay of the call will be available for 30 days. The conference call replay numbers are as follows: United States -- 800-642-1687; International -- 706-645-9291. The Access Code is 24062138.
Investors will also have the opportunity to listen to the conference call and the replay over the Internet through 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 sells its broadband, wireless, and handset solutions to operators in both emerging and established telecommunications 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 and headquartered in Alameda, California, the company has research and design operations in the United States, China, Korea and India. UTStarcom is a FORTUNE 1000 company.
For more information about UTStarcom, visit the company's Web site at http://www.utstar.com/.
Forward-Looking Statements
This release includes forward-looking statements, including the foregoing statements regarding the Company's expectations with respect to anticipated improvements in its operational expenses to provide profitable growth, as well as anticipated fourth quarter revenues, gross margins and operating expenses. 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 develop and implement a successful new corporate strategy and to identify and execute on opportunities and internal improvements that will improve its competitiveness and profitability. The Company also refers readers to the risk factors identified in its latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as filed with the Securities and Exchange Commission.
Company Contact Chesha Kamieniecki Director of Investor Relations UTStarcom, Inc. (510) 749-1560 UTStarcom, Inc. Condensed Consolidated Balance Sheets (in thousands) (Unaudited) September 30, December 31, 2007 2006 ASSETS (As reported) Current assets: Cash, cash equivalents and short-term investments $643,868 $671,169 Accounts and notes receivable, net 335,864 406,080 Inventories and deferred costs 609,522 635,838 Prepaids and other current assets 140,483 123,521 Total current assets 1,729,737 1,836,608 Long-term assets: Property, plant and equipment, net 212,835 213,155 Long-term deferred costs 166,503 176,649 Other long-term assets 89,540 147,538 Total assets $2,198,615 $2,373,950 LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $194,941 $304,869 Short-term debt 414,977 102,758 Customer advances 304,554 265,812 Deferred revenue 90,137 95,742 Other current liabilities 228,591 273,883 Total current liabilities 1,233,200 1,043,064 Long-term liabilities: Long-term debt 404 275,161 Long-term deferred revenue and other liabilities 259,728 274,872 Total liabilities 1,493,332 1,593,097 Minority interest in consolidated subsidiaries 4,532 6,493 Total stockholders' equity 700,751 774,360 Total liabilities, minority interest and stockholders' equity $2,198,615 $2,373,950 UTStarcom, Inc. Consolidated Statement of Operations (in thousands, except per share amounts) (Unaudited) Three months ended Nine months ended September 30, September 30, 2007 2006 2007 2006 (As reported) (As reported) Net sales $646,494 $600,899 $1,660,640 $1,754,406 Cost of net sales 582,061 526,098 1,441,193 1,446,864 Gross profit 64,433 74,801 219,447 307,542 Operating expenses: Selling, general and administrative 74,297 80,076 242,999 246,908 Research and development 41,881 46,305 127,700 139,310 Amortization of intangible assets 4,046 4,821 12,137 14,567 Gain on sale of semi-conductor design assets (4,271) (12,291) (4,271) (12,291) Total operating expenses 115,953 118,911 378,565 388,494 Operating loss (51,520) (44,110) (159,118) (80,952) Interest income (expense), net (5,859) 594 (11,601) 1,406 Other income, net 4,347 1,835 8,476 12,289 Loss before income taxes and minority interest (53,032) (41,681) (162,243) (67,257) Income tax expense (3,095) (1,459) (10,735) (8,966) Minority interest in losses of consolidated subsidiaries 799 92 1,961 907 Net loss $(55,328) $(43,048) $(171,017) $(75,316) Loss per share - Basic and diluted $(0.46) $(0.36) $(1.41) $(0.62) Weighted average shares used in per-share calculation: - Basic and diluted 121,011 120,676 120,965 120,628 UTStarcom, Inc. Condensed Consolidated Statement of Cash Flows (in thousands) (Unaudited) Nine months ended Nine months ended September 30, 2007 September 30, 2006 (As reported) Net cash (used in) provided by operating activities $(189,720) $18,122 Cash flows from investing activities: Property, plant and equipment, net (22,180) (17,040) Proceeds from sale of semiconductor design asset 4,271 19,965 Proceeds from sale of long-term investments 3,334 - Change in restricted cash and long- term investments 7,273 26,536 Short-term investments, net (8,962) 1,939 Investment in affiliates, net of cash acquired - (302) Other (465) 1,538 Net cash (used in) provided by investing activities (16,729) 32,636 Cash flows from financing activities: Borrowings, net 33,045 (95,992) Other 6,028 (364) Net cash provided by (used in) financing activities 39,073 (96,356) Effect of exchange rate changes on cash and cash equivalents 15,303 4,437 Net decrease in cash and cash equivalents (152,073) (41,161) Cash and cash equivalents at beginning of period 661,623 645,571 Cash and cash equivalents at end of period $509,550 $604,410
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