UTStarcom Reports Unaudited Third Quarter 2012 Financial Results

       UTStarcom Reports Unaudited Third Quarter 2012 Financial Results

PR Newswire

BEIJING, Nov. 15, 2012

BEIJING, Nov. 15, 2012 /PRNewswire/ -- UTStarcom Holdings Corp. ("UTStarcom"
or "the Company") (NASDAQ: UTSI), a leading provider of media operational
support services and broadband equipment products and services, today reported
financial results for the third quarter ended September 30, 2012.

In a separate press release issued today, the Company also announced a
strategic plan to transform UTStarcom into a higher growth, more profitable
business focused on providing next generation media operational support
services as well as higher value-added broadband equipment products and
services that are targeted to a specific set of customers. The strategy
builds on recently announced initiatives, such as the divestiture of the IPTV
equipment business, acceleration of the media operational support services
business, and appointment of new executive leadership. UTStarcom aims to be a
Next Generation Media company and the new plan is expected to result in
significant overall improvement in UTStarcom's business performance over the
long-term.

Third Quarter 2012 Highlights

  oThe Company successfully closed the divestiture of its IPTV business on
    August 31, 2012 as part of a plan to transition the Company into higher
    growth, more profitable areas. As of September 30, 2012, the Company did
    not meet the requirements to report results from the IPTV division
    separately as discontinued operations.
  oTo enable a comparison of the year-to-date and future periods financial
    results the Company has prepared non-GAAP results. Included in this press
    release are quarterly and year-to-date non-GAAP comparisons that exclude
    financial results from the IPTV business and amortization of PHS deferred
    revenue. Our GAAP financial results and reconciliation with the non-GAAP
    numbers discussed in this release are at the end of this press release.
  oThird quarter of 2012 non-GAAP net sales decreased 19.1% year over year to
    $37.0 million, compared to $45.8 million non-GAAP net sales in the third
    quarter of 2011.
  oThird quarter of 2012 non-GAAP gross profit decreased 37.7% year over year
    to $12.7 million, compared to $20.5 million non-GAAP gross profit in the
    third quarter of 2011.
  oNon-GAAP net loss attributable to UTStarcom's shareholders was $0.2
    million, or non-GAAP basic loss per share of $0.0, in the third quarter of
    2012, compared to non-GAAP net income of $3.4 million, or non-GAAP basic
    income per share of $0.02, for the corresponding period of 2011.
  oCash, cash equivalents and short-term investments were $213.1 million as
    of September 30, 2012.

UTStarcom Chief Financial Officer Robert Pu stated, "During the third quarter
we experienced changes to the mix of our product sales at the international
level and this had an impact on sales and margins of our underlying business,
excluding the divested IPTV portion. However, our balance sheet is stronger
today than it has been in the past as our cash position remains robust, at
above the $200M level, and we effectively shed a significant amount of
liabilities via the IPTV divestiture. This said, we have more than sufficient
working capital to support our broadband business and the funding of our new
initiatives."

UTStarcom President and Chief Executive Officer, William Wong, stated "We are
pleased with the fact that our underlying business is still achieving
relatively strong gross margins and given the IPTV divestiture we have created
a leaner operating model. Nevertheless, the third quarter and year-to-date
financial results do underscore the urgency of the transition that UTStarcom
is undergoing to adapt to market conditions. We have now fully entered a
transformation period that will enable us to strengthen the business in the
long-term and our leadership team is excited for the direction that the 'new'
UTStarcom will take as we build out our capabilities to become a Next
Generation Media company."

Third Quarter 2012 Financial Results 

The Company successfully closed the divestiture of its IPTV business on August
31, 2012 as part of a plan to transition the Company into higher growth, more
profitable areas. As of September 30, 2012, the Company did not meet the
requirements to report results from the IPTV division separately as
discontinued operations. To enable a comparison of the year-to-date and future
periods financial results the Company has prepared non-GAAP results. Included
below are quarterly and year-to-date non-GAAP comparisons that exclude
financial results from the IPTV business and amortization of PHS deferred
revenue. Our GAAP financial results and reconciliation with the non-GAAP
numbers discussed in this release are at the end of this press release.

Total Revenues

UTStarcom's total revenues for the third quarter of 2012 were $40.3 million, a
decrease of 51.6% year-over-year from $83.3 million for the corresponding
period of 2011. Total revenues for the nine months ended September 30, 2012
were $143.5 million, a decrease of 39.5% year-over-year from $237.1 million
for the corresponding period of 2011.

UTStarcom's non-GAAP total revenues for the third quarter of 2012 were $37.0
million, a decrease of 19.1% year-over-year from $45.8 million for the
corresponding period of 2011. Non-GAAP total revenues for the nine months
ended September 30, 2012 were $116.3 million, a decrease of 11.9%
year-over-year from $132.0 million for the corresponding period of 2011.

Three months ended September 30, 2012 and 2011

  oNon-GAAP net sales from equipment for the third quarter of 2012 were $32.1
    million, a decrease of 17.2% year-over-year. The decrease was mainly
    caused by decreased sales of PTN products in Japan and GEPON products in
    China which was partially offset by increased sales of MSAN products in
    Japan.
  oNon-GAAP net sales from equipment-based services for the third quarter of
    2012 were $5.0 million, a decrease of 29.6% year-over-year. The decrease
    was primarily driven by fewer next generation network ("NGN") products
    related services provided in the third quarter of 2012.

Nine months ended September 30, 2012 and 2011

  oNon-GAAP net sales from equipment for the nine months ended September 30,
    2012 were $99.1 million, a decrease of 7.9% year-over-year. The decrease
    was mainly driven by decreased sales of PTN products in Japan and GEPON
    products in China which was partially offset by increased sales of MSAN
    products in Japan. The $7.4 million of equipment revenue recognized from
    the Jersey Telecom Limited contract in the second quarter of 2011 also
    contributed to the year-over-year decrease.
  oNon-GAAP net sales from equipment-based services for the nine months ended
    September 30, 2012 were $16.9 million, a decrease of 30.5% year-over-year.
    The decrease was mainly due to fewer NGN products related services
    provided in the third quarter of 2012. The $3.9 million of equipment-based
    service revenue recognized from the Jersey Telecom Limited contract in the
    second quarter of 2011 also contributed to the year-over-year decrease.

Gross Profit

UTStarcom's gross profit was $14.3 million, or 35.5% of net sales, for the
third quarter of 2012, compared to $31.9 million, or 38.4% of net sales, for
the corresponding period of 2011. Gross profit was $54.5 million, or 38.0% of
net sales, for the nine months ended September 30, 2012, compared to $85.8
million, or 36.2% of net sales, for the corresponding period of 2011.

UTStarcom's non-GAAP gross profit was $12.7 million, or 34.4% of net sales,
for the third quarter of 2012, compared to $20.5 million, or 44.7% of net
sales, for the corresponding period of 2011. Non-GAAP gross profit was $40.7
million, or 35.0% of net sales, for the nine months ended September 30, 2012,
compared to $56.6 million, or 42.9% of net sales, for the corresponding period
of 2011.

Three months ended September 30, 2012 and 2011

  oNon-GAAP gross profit for equipment sales for the third quarter of 2012
    was $12.4 million, a decrease of 33.6% year-over-year. Non-GAAP gross
    margin for equipment sales for the third quarter of 2012 was 38.7%,
    compared to 48.2% for the corresponding period in 2011. The margin
    decrease was primarily due to increased sales of MSAN products with
    relatively lower gross margins compared to PTN products in the third
    quarter of 2012.
  oNon-GAAP gross profit for equipment-based services for the third quarter
    of 2012 was $0.3 million, a decrease of 82.8% year-over-year. Gross margin
    for equipment-based services for the third quarter of 2012 was 6.6%,
    compared to 27.2% for the corresponding period of 2011. The margin
    decrease was primarily due to fixed services costs remaining relatively
    constant, despite fewer NGN products related services provided in 2012.

Nine months ended September 30, 2012 and 2011

  oNon-GAAP gross profit for equipment sales for the nine months ended
    September 30, 2012 was $38.4 million, a decrease of 21.5% year-over-year.
    Gross margin for equipment sales for the nine months ended September 30,
    2012 was 38.8%, compared to 45.5% for the corresponding period of 2011.
    The margin decrease was primarily due to higher equipment gross margin
    generated from $7.4 million equipment revenue recognized from the Jersey
    Telecom Limited contract in the second quarter of 2011 and from increased
    sales of relatively lower margin MSAN products compared to PTN products in
    2012.
  oNon-GAAP gross profit for equipment-based services for the nine months
    ended September 30, 2012 was $2.4 million, a decrease of 69.9%
    year-over-year. Gross margin for equipment-based services for the nine
    months ended September 30, 2012 was 13.9%, compared to 32.2% for the
    corresponding period of 2011. The margin decrease was primarily due to
    fewer NGN products related services provided in 2012, while fixed services
    costs remained relatively constant.

Operating Expenses

Operating expenses for the third quarter of 2012 were $40.2 million, an
increase of 126.3% year-over-year, from $17.8 million for the corresponding
period in 2011. Operating expenses for the nine months ended September 30,
2012 were $82.0 million, an increase of 12.2% year-over-year, from $73.0
million for the corresponding period of 2011.

Non-GAAP operating expenses for the third quarter of 2012 were $18.1 million,
an increase of 66.7% year-over-year, from $10.8 million for the corresponding
period in 2011. Non-GAAP operating expenses for the nine months ended
September 30, 2012 were $49.5 million, a decrease of 1.0% year-over-year, from
$50.1 million for the corresponding period of 2011.

Three months ended September 30, 2012 and 2011

  oNon-GAAP SG&A expenses in the third quarter of 2012 were $12.6 million, an
    increase of 6.5% year-over-year. The increase was primarily due to an
    increase in settlement fee which partially offset by decrease in personnel
    costs as a result of restructuring efforts.
  oNon-GAAP R&D expenses in the third quarter of 2012 were $6.0 million, an
    increase of 80.6% year-over-year. The increase was primarily due to an
    increase in consulting cost for several strategic outsourced design
    projects.
  oNon-GAAP net gains on restructuring for the third quarter of 2012 were
    $0.2 million, compared to costs of $0.5 million for the
    corresponding period of 2011. The decrease was primarily the result of the
    latest restructuring plan in 2009 nearing completion. UTStarcom does not
    expect to incur additional significant restructuring charges for the
    remainder of 2012 related to the previous restructuring plans.
  oNon-GAAP net gain on divestitures in the third quarter of 2012 was $0.4
    million, compared to $4.2 million as a result of contingent gain realized
    in 2011 upon entering into a three-party assignment agreement to transfer
    and release all of the remaining obligations in connection with the sale
    of China PDSN assets in the third quarter of2010.

Nine months ended September 30, 2012 and 2011

  oNon-GAAP SG&A expenses for the nine months ended September 30, 2012 were
    $33.5 million, a decrease of 19.6% year-over-year. The decrease was
    primarily due to a decrease in personnel costs as a result of our
    restructuring efforts. The lower year-over-year SG&A expenses were also
    the result of recoveries from bad debt and expenses as a result of the
    relocation of Hangzhou office facility.
  oNon-GAAP R&D expenses for the nine months ended September 30, 2012 were
    $16.2 million, an increase of 71.2% year-over-year. The increase was
    primarily due to an increase in consulting cost for several strategic
    outsourced design projects.
  oNon-GAAP amortization of intangible assets for the nine months ended
    September 30, 2012 was approximately $0.4 million compared to $0.9 million
    for the corresponding period of 2011 as a result of the amortization of
    intangible assets acquired in the iTV Media investment, formerly Stage
    Smart. The Company deconsolidated iTV Media in the second quarter of 2012
    and the amortization of intangible assets was terminated as of the end of
    that period.
  oNon-GAAP restructuring costs for the nine months ended September 30, 2012
    were approximately $0.4 million, a decrease of 83.5% year-over-year. The
    decrease was primarily the result of the latest restructuring plan in 2009
    nearing completion.
  oNon-GAAP net gain on divestitures for the nine months ended September 30,
    2012 was $1.0 million which was the contingent gain realized in 2012 upon
    releasing of the remaining obligations in connection with the sale of
    China Packet Data Services Node ("PDSN") assets in the third quarter of
    2010.

Operating Loss

Operating loss for the third quarter of 2012 was $25.9 million, compared to
operating income of $14.2 million for the corresponding period of 2011.
Operating loss for the nine months ended September 30, 2012 was $27.5 million,
compared to operating income of $12.7 million for the corresponding period of
2011.

Non-GAAP operating loss for the third quarter of 2012 was $5.3 million,
compared to non-GAAP operating income of $9.6 million for the corresponding
period of 2011. Non-GAAP operating loss for the nine months ended September
30, 2012 was $8.8 million, compared to non-GAAP operating income of $6.6
million for the corresponding period of 2011.

Other Income (Expense), Net

Three months ended September 30, 2012 and 2011

Net other income for the third quarter of 2012 was $5.4 million compared to
net other expense of $7.3 million for the corresponding period of 2011. Net
other income in the third quarter of 2012 primarily consisted of $6.1 million
of foreign exchange gain as a result of appreciation in INR against USD in the
quarter. Net other expense for the third quarter of 2011 primarily consisted
of a $7.2 million foreign exchange loss attributed to the depreciation of INR
against USD in the quarter.

Nine months ended September 30, 2012 and 2011

Net other income for the nine months ended September 30, 2012 was $0.8 million
compared to net other expense of $3.2 million for the corresponding period in
2011. Net other income for the nine months ended September 30, 2012 primarily
consisted of income of $1.5 million by release portion of the reserve related
to tax liabilities provided to the buyers of our subsidiary in Korea due to
expiration of the statute of limitation. Net other expense for the nine
months ended September 30, 2011 primarily consisted of $3.5 million of foreign
exchange loss attributed to the depreciation of INR against USD in the first
nine months of 2011.

Net Income (Loss)

Net loss attributable to UTStarcom shareholders for the third quarter and the
first nine months of 2012 was $20.8 million and $26.7 million, respectively.
Net income attributable to UTStarcom shareholders for the third quarter and
the first nine months of 2011 was $8.0 million and $9.3 million,
respectively. Basic loss per share for the third quarter and the first nine
months of 2012 amounted to $0.14 and $0.18, respectively. Basic income per
share for the third quarter and the first nine months of 2011 was $0.05 and
$0.06, respectively.

Non-GAAP net loss attributable to UTStarcom shareholders for the third quarter
and the first nine months of 2012 was $0.2 million and $8.1 million,
respectively. Non-GAAP net income attributable to UTStarcom shareholders for
the third quarter and the first nine months of 2011 was $3.4 million and $3.1
million, respectively. Non-GAAP basic loss per share for the third quarter and
the first nine months of 2012 amounted to $0.0 and $0.05, respectively.
Non-GAAP basic and diluted income per share for the third quarter and the
first nine months of 2011 was $0.02 and $0.02, respectively.

Cash Flow

  oNet cash used by operating activities for the third quarter of 2012 was
    $7.5 million. The Company's operating activities were impacted by a change
    in operating assets and liabilities of $7.0 million.
  oNon-GAAP net cash used by operating activities for the third quarter of
    2012 was $1.8 million. The Company's operating activities were impacted by
    a change in operating assets and liabilities of $4.4 million.
  oCash used by investing activities for the third quarter of 2012 was $56.0
    million, primarily driven by the closing of IPTV divestiture.
  oNon-GAAP cash used by investing activities for the third quarter of 2012
    was $2.9 million, primarily driven by the closing of IPTV divestiture.
  oCash used in financing activities for the third quarter of 2012 was $3.7
    million for repurchasing shares of common stock of the Company.

As of September 30, 2012, UTStarcom had cash and cash equivalents and
short-term investments of $213.1 million.

Business Outlook

The Company currently believes that fourth quarter trends will follow closely
to what was experienced in the third quarter. The Company therefore currently
anticipates it will achieve average gross margins of approximately 35% and
will be slightly below operating cash flow breakeven in 2012.

Looking further ahead, the new strategic plan announced today is expected to
in time result in a more predictable, recurring revenue stream based on an
array of sources, including subscription fees, platform licensing fees, and
fees on value added services as well as higher margins due to the increased
profitability of these revenues. UTStarcom will be focusing its growth efforts
in China and across Asia and, based on current plans, the Company expects to
invest in and launch its TV over IP services in multiple countries during
2013. The Company anticipates revenue from the new TV over IP services to
become the majority revenue contributor for UTStarcom by 2015, with gross
margins in that line of the business exceeding 50% in that same timeframe.

Mr. Wong concluded, "We are very focused on the long-term opportunities that
are before us and are looking forward to rolling out our new plan that we
believe will deliver a more predictable revenue stream, higher margins, and
increased profitability."

About Non-GAAP Financial Measures

To supplement the Company's consolidated financial results presented in
accordance with United States Generally Accepted Accounting Principles
("GAAP"), the Company uses certain non-GAAP measures to present those GAAP
metrics as if IPTV business and PHS-related deferred revenue amortization had
been excluded prior to each time period reflected. The presentation of these
non-GAAP financial measures is not intended to be considered in isolation or
as a substitute for the financial information prepared and presented in
accordance with GAAP. For more information on these non-GAAP financial
measures, please see the table captioned "Reconciliation of GAAP and non-GAAP
Financial Data" set forth at the end of this press release.

The Company believes that these non-GAAP financial measures provide meaningful
supplemental information regarding its operating performance by excluding
amortization of PHS net sales and IPTV related business that may not be
indicative of its operating performance. The Company believes that both
management and investors benefit from referring to these non-GAAP financial
measures in assessing its operating performance and when planning and
forecasting future periods. These non-GAAP financial measures also facilitate
management's internal comparisons to the Company's historical performance. The
Company computes its non-GAAP financial measures using the same consistent
method from quarter to quarter. The Company believes these non-GAAP financial
measures are useful to investors in allowing for greater transparency with
respect to supplemental information used by management in its financial and
operational decision making. These non-GAAP measures 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 GAAP.

Third Quarter 2012 Conference Call Details

UTStarcom's management will host an earnings conference call at 7:30 a.m. U.S.
Eastern Time on Thursday November 15, 2012 (8:30 p.m. Beijing/Hong Kong Time
on November 15, 2012).

The conference call dial-in numbers are as follows:

United States: + 1-800-860-2442
International: + 1-412-858-4600
China: 10-800-712-2304
Hong Kong: 800-962475

The conference ID number is 10021309.

A replay of the call will be available one hour after the end of the
conference until 9:00 a.m. U.S. Eastern Time on November 23, 2012.

The conference call replay numbers are as follows:

United States: + 1-877-344-7529
International: + 1-412-317-0088

The conference ID number for accessing the recording is 10021309.

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

About UTStarcom Holdings Corp

UTStarcom is focused on providing next generation media operational support
services in the rapidly growing markets for TV over IP services and broadband
equipment products and services. UTStarcom is committed to meeting the
evolving needs of cable and broadband service providers to enable a more
personalized entertainment experience. The Company sells its media operational
support services and broadband equipment products and services to operators in
both emerging and established broadband and cable markets around the world.

UTStarcom was founded in 1991 and listed on the NASDAQ in 2000. It has
operational headquarters in Beijing, China and research and development
operations in China and India. In year 2011, the Company deployed a revamped
growth strategy that concentrates on providing media operation support
services. For more information about UTStarcom, visit the Company's Web site
at http://www.utstar.com.

Forward-Looking Statements

This press release includes forward-looking statements, including statements
regarding the Company's expectations relating to the deployment and growth of
its operational support services business, the sufficiency of its cash
balance, the Company's gross margin and cash flow expectations for 2012. These
statements are forward-looking in nature and subject to risks and
uncertainties that may cause actual results to differ materially and adversely
from the Company's current expectations. These include risks and uncertainties
related to, among other things, changes in the financial condition and cash
position of the Company, changes in the composition of the Company's
management and their effect on the Company, the Company's ability to realize
anticipated results of operational improvements and benefits of the
divestiture transaction, the ability to successfully identify and acquire
appropriate technologies and businesses for inorganic growth and to integrate
such acquisitions, the ability to internally innovate and develop new
products, assumptions the Company makes regarding the growth of the market and
the success of the Company's offerings in the market, and the Company's
ability to execute its business plan and manage regulatory matters. The risks
and uncertainties also include the risk factors identified in the Company's
latest Annual Report on Form 20-F and Current Reports on Form 6-K,as filed
with the Securities and Exchange Commission. The Company is in a period of
transition and the conduct of its business is exposed to additional risks as a
result. All forward-looking statements included in this press release are
based upon information available to the Company as of the date of this press
release, which may change, and UTStarcom assumes no obligation to update any
such forward-looking statement.



UTStarcom Holdings Corp.
Unaudited Condensed Consolidated Balance Sheets
                                  September 30,          December 31,
                                  2012                   2011
ASSETS                            (In thousands, except par value)
Current assets:
Cash, cash equivalents and        $             $         
short-term investments            213,091               303,998
Accounts and notes receivable,    12,348                 20,216
net
Inventories and deferred costs    129,005                137,484
Prepaids and other current        52,888                 42,099
assets
Total current assets              407,332                503,797
Long-term assets:
Property, plant and equipment,    10,580                 12,199
net
Goodwill                          -                      13,820
Intangible assets, net            -                      3,625
Long-term deferred costs          24,951                 39,741
Other long-term assets            63,072                 27,758
Total assets                      $             $         
                                  505,935               600,940
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                  $            $          
                                  22,836                23,530
Customer advances                 84,763                 82,589
Deferred revenue                  44,145                 64,989
Other current liabilities         40,073                 52,679
Total current liabilities         191,817                223,787
Long-term liabilities:
Long-term deferred revenue and    87,474                 106,114
other liabilities
Total liabilities                 279,291                329,901
Total equity                      226,644                271,039
Total liabilities and equity      $             $         
                                  505,935               600,940



UTStarcom Holdings Corp.
Unaudited Condensed Consolidated Statements of Operations
                                                                                           ThreemonthsendedSeptember30,  NinemonthsendedSeptember30,
                                                                                           2012                     2011             2012                      2011
                                                                                           (in thousands, except per share data)
Net sales                                                                                  $  40,328               $ 83,297        $ 143,454                 $ 237,110
Cost of net sales                                                                          26,010                   51,352           88,998                    151,326
Gross profit                                                                              14,318                   31,945           54,456                    85,784
                                                                                           35.5 %                   38.4 %           38.0 %                    36.2 %
Operatingexpenses:
Selling, general and administrative                                                        13,988                   14,780           39,738                    52,528
Research and development                                                                   8,243                    7,327            23,850                    21,591
Amortization of intangible assets                                                          -                        310              516                       929
Impairment of goodwill and other long-lived assets                                        854                      -                854                       -
Restructuring                                                                             (191)                    (509)            358                       2,175
Net loss (gain) on divestiture                                                             17,297                   (4,151)          16,640                    (4,185)
Total operating expenses                                                                   40,191                   17,757           81,956                    73,038
Operating income (loss)                                                                    (25,873)                 14,188           (27,500)                  12,746
Interest income, net                                                                       363                      369              1,556                     1,240
Other income (expense), net                                                                5,398                    (7,305)          811                       (3,214)
Income (loss) before income taxes                                                          (20,112)                 7,252            (25,133)                  10,772
Income taxes benefit(expense)                                                              (649)                    301              (2,806)                   (2,461)
Net income (loss)                                                                          (20,761)                 7,553            (27,939)                  8,311
Net loss attributable to noncontrolling interest                                           -                        458              1,195                     1,006
Net income (loss) attributable to UTStarcom Holdings Corp.                                 $ (20,761)              $  8,011        $ (26,744)                $   9,317
Net income (loss) per share attributable to UTStarcom Holdings Corp.—Basic                 $   (0.14)            $   0.05       $   (0.18)              $    0.06
Weighted average shares outstanding—Basic                                                  143,688                  155,516          148,200                   155,106



UTStarcom Holdings Corp.
Unaudited Condensed Consolidated Statements of Cash Flows
                                                                                                       Three months       Nine months ended
                                                                                                       ended September     September 30,
                                                                                                       30,
                                                                                                       2012      2011      2012       2011
                                                                                                       (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                                                    (20,761)  $ 7,553  $(27,939)  $ 
                                                                                                                                      8,311
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization                                                                        796       795       3,078      2,228
Amortization of deferred gain on sale-leaseback                                                      -         -         -          (625)
Provision for (recovery of ) doubtful accounts                                                       54        (270)     (1,037)    3,479
Stock-based compensation expense                                                                     1,175     1,285     2,415      2,571
Net loss (gain) on divestitures                                                                      17,314    (4,151)   16,657     (4,185)
Other-than-temporary impairment of equity investments                                                854       -         854        -
Deferred income taxes                                                                                100       220       (120)      439
Other                                                                                                52        (229)     (79)       (396)
Changes in operating assets and liabilities:
Accounts receivable                                                                                  (4,847)   4,147     3,457      5,362
Inventories and deferred costs                                                                       2,846     28,998    17,418     67,619
Other assets                                                                                         (3,679)   1,541     (4,672)    10,694
Accounts payable                                                                                     (523)     1,208     3,843      (7,256)
Income taxes payable                                                                                 562       (1,151)   2,294      3,106
Customer advances                                                                                    4,365     (12,706)  5,180      3,319
Deferred revenue                                                                                     (9,335)   (33,058)  (30,996)   (99,224)
Other liabilities                                                                                    3,576     (6,280)   (9,608)    (34,911)
Net cash used in operating activities                                                                (7,451)   (12,098)  (19,255)   (39,469)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment                                                           (2,217)   (3,627)   (5,165)    (9,708)
Net proceeds from divestitures                                                                       -         -         135        34
Change in restricted cash                                                                           (277)     5,863     1,228      4,243
Purchase of an investment interest                                                                   -         (150)     -          (761)
Contribution of equity investment through a shareholder loan                                         -                   -          (7,119)
Deconsolidation of ITV                                                                               -         -         (6,841)    -
Payment for IPTV divestiture and convertible bond                                                    (52,965)  -         (52,965)   -
Purchase of short-term investments                                                                   (500)     (1,578)   (2,267)    (7,291)
Proceeds from sale of short-term investments                                                         44        445       3,878      6,310
Other                                                                                                (51)      216       83         586
Net cash used in investing activities                                                                (55,966)  1,169     (61,914)   (13,706)
CASHFLOWSFROMFINANCINGACTIVITIES:
Issuance of ordinary share upon exercise of options                                                  -         -         -          124
Repurchase of ordinary share                                                                         (3,659)   (1,500)   (6,879)    (1,500)
Net cash provided by (used in) financing activities                                                  (3,659)   (1,500)   (6,879)    (1,376)
Effect of exchange rate changes on cash and cash equivalents                                         2,087     761       (1,176)    4,933
Net increase (decrease) in cash and cash equivalents                                                 (64,989)  (11,668)  (89,224)   (49,618)
Cash and cash equivalents at beginning of period                                                     277,391   313,557   301,626    351,507
Cash and cash equivalents at end of period                                                           $212,402  $301,889  $212,402   $301,889



UTSTARCOM HOLDINGS CORP.
November 15, 2012 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
(In thousands)
(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 PHS-related deferred
revenue amortization and IPTV related business had been excluded in
prior years comparatives. 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   Nine months   Qtr ended  Nine months
                               ended                    ended
                   30/Sep/11   30/Sep/11     30/Sep/12  30/Sep/12
Non-GAAP Revenue   $45,794     $132,033      $37,026    $116,266
Non-GAAP Gross     $20,456     $56,643       $12,734    $40,699
Profit
 Non-GAAP Gross  44.7%       42.9%         34.4%      35.0%
Margin %
Non-GAAP Operating $9,618      $6,573        ($5,335)   ($8,845)
Income (Loss)
Non-GAAP Net
Income (Loss)      $3,441      $3,144        ($223)     ($8,089)
attributable to
UTStarcom
Non-GAAP Net
Income (Loss) per
Share Attributable $0.02       $0.02         ($0.00)    ($0.05)
to UTStarcom
Holdings
Corp.—Basic
Please refer to the preceding reconciliation tables for the adjustments to
GAAP Revenue, Gross Profit, Operating Income (Loss), Net Income (Loss) and
EPS.



UTSTARCOM HOLDINGS CORP.
November 15, 2012 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ in thousand)
(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 PHS-related deferred revenue
amortization and IPTV related business had been excluded in prior years
comparatives. 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   Nine months   Qtr ended  Nine months
                                ended                    ended
                    30/Sep/11   30/Sep/11     30/Sep/12  30/Sep/12
GAAP Revenue (a)    $83,297     $237,110      $40,328    $143,454
Less: Amortization  $24,011     $71,378       -          -
of PHS Revenue
Less: IPTV Revenue  $13,492     $33,699       $3,302     $27,188
Non-GAAP Revenue    $45,794     $132,033      $37,026    $116,266
(a) GAAP Revenue for each period is the consolidated revenue as reported on
Form 6-K, as applicable, for such period.

UTSTARCOM HOLDINGS CORP.
November 15, 2012 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ in thousand)
(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 PHS-related deferred revenue amortization
and IPTV related business had been excluded in prior years comparatives. 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  Nine months  Qtr ended  Nine months
                                   ended                   ended
                        30/Sep/11  30/Sep/11    30/Sep/12  30/Sep/12
GAAP Gross Profit (a)   $31,945    $85,784      $14,318    $54,456
 GAAP Gross Margin %  38.4%      36.2%        35.5%      38.0%
Less: Gross Profit from
Amortization of PHS     8,349      24,817       -          -
Revenue
Less:GrossProfit from 3,140      4,324        1,584      13,757
IPTV Revenue
Non-GAAP Gross Profit   $20,456    $56,643      $12,734    $40,699
 Non-GAAP Gross       44.7%      42.9%        34.4%      35.0%
Margin %
(a) GAAP Gross Profit and GAAP Gross Margin % for each period is the
consolidated gross profit and gross margin % as reported on Form 6-K, as
applicable, for such period.

UTSTARCOM HOLDINGS CORP.
November 15, 2012 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ in thousand)
(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 PHS-related deferred revenue amortization and IPTV
related business had been excluded in prior years comparatives. 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   Nine months   Qtr ended   Nine months
                                 ended                     ended
                     30/Sep/11   30/Sep/11     30/Sep/12   30/Sep/12
GAAPOperating       $17,757     $73,038       $40,191     $81,956
Expenses(a)
Less: Operating
Expenses directly    $6,919      $22,968       $22,122     $32,412
related to IPTV
Non-GAAP Operating   $10,838     $50,070       $18,069     $49,544
Expenses
(a) GAAP Operating Expenses for each period is the consolidated Operating
Expenses as reported on Form 6-K, as applicable, for such period.

UTSTARCOM HOLDINGS CORP.
November 15, 2012 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ in thousand)
(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 PHS-related deferred
revenue amortization and IPTV related business had been excluded in
prior years comparatives. 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   Nine months   Qtr ended  Nine months
                               ended                    ended
                   30/Sep/11   30/Sep/11     30/Sep/12  30/Sep/12
GAAP Operating     $14,188     $12,746       ($25,873)  ($27,500)
Income (Loss) (a)
Less: Profit from
Amortization of    $8,349      $24,817       -          -
PHS Revenue
Less: Profit from $3,140      $4,324        $1,584     $13,757
IPTV Revenue
Less: Operating
Expenses directly  $6,919      $22,968       $22,122    $32,412
related to IPTV
Non-GAAP Operating $9,618      $6,573        ($5,335)   ($8,845)
Income (Loss)
(a) GAAP Operating Income (Loss) for each period is the consolidated operating
loss as reported on Form 6-K, as applicable, for such period.



UTSTARCOM HOLDINGS CORP.

November 15, 2012 Conference Call

RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ in thousand)
(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 PHS-related deferred revenue
amortization and IPTV related business had been excluded in prior years
comparatives. 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   Nine months   Qtr ended   Nine months
                               ended                     ended
                   30/Sep/11   30/Sep/11     30/Sep/12   30/Sep/12
GAAP Net Income
(Loss)             $8,011      $9,317        ($20,761)   ($26,744)
attributable to
UTStarcom(a)
Less: Profit from
Amortization of    $8,349      $24,817       -           -
PHS Revenue
Less: Profit from $3,140      $4,324        $1,584      $13,757
IPTV Revenue
Less: Operating
Expenses directly  $6,919      $22,968       $22,122     $32,412
related to IPTV
Non-GAAP Net
Income (Loss)      $3,441      $3,144        ($223)      ($8,089)
attributable to
UTStarcom
(a) GAAP Net Income (Loss) for each period is the consolidated net loss as
reported on Form 6-K, as applicable, for such period.



UTSTARCOM HOLDINGS CORP.
November 15, 2012 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
(In thousands)
(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 PHS-related deferred revenue
amortization and IPTV related business had been excluded in prior years
comparatives. 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  Nine months  Qtr ended  Nine months
                                 ended                   ended
                      30/Sep/11  30/Sep/11    30/Sep/12  30/Sep/12
GAAP Net Income
(Loss) attributable   $8,011     $9,317       ($20,761)  ($26,744)
to UTStarcom(a)
Less: Profit from
Amortization of PHS   $8,349     $24,817      $0         $0
Revenue
Less: Profit from    $3,140     $4,324       $1,584     $13,757
IPTV Revenue
Less: Operating
Expenses from IPTV    $6,919     $22,968      $22,122    $32,412
Related
Non-GAAP Net Income
(Loss) attributable   $3,441     $3,144       ($223)     ($8,089)
to UTStarcom
Weighted Average
Shares                $155,516   $155,106     $143,688   $148,200
Outstanding—Basic
GAAP Net Income
(Loss) per Share
Attributable to       0.05       0.06         (0.14)     (0.18)
UTStarcom Holdings
Corp.—Basic
Non-GAAP Net Income
(Loss) per share
attributable to       0.02       0.02         (0.00)     (0.05)
UTStarcom Holdings
Corp.—Basic
(a) GAAP Net Income (Loss) per share for each period is the consolidated net
income (loss) as reported on Form 6-K, as applicable, for such period.



UTStarcom Holdings Corp.
Unaudited Condensed Consolidated Statements of Cash Flows
                                                                                ThreemonthsendedSeptember30,  NinemonthsendedSeptember30,
                                                                                2012                 2011           2012                2011
                                                                                (In thousands)
CASHFLOWSFROMOPERATINGACTIVITIES:
GAAP Net cash used in operating activities                                    (7,451)              (12,098)       (19,255)            (39,469)
Less: Net cash provided by (used in) IPTV operating activities               (5,602)              1,545          (14,241)            (19,608)
Non-GAAP Net cash used in operating activities                                (1,849)              (13,643)       (5,014)             (19,861)
CASH FLOWS FROM INVESTING ACTIVITIES:
GAAP Net cash provided by (used in) investing activities                      (55,966)             1,169          (61,914)            (13,706)
Less: Net cash used in IPTV investing activities                              (53,062)             (5)            (53,444)            (95)
Non-GAAP Net cash provided by (used in) investing activities                  (2,904)              1,174          (8,470)             (13,611)
CASH FLOWS FROM FINANCING ACTIVITIES:
GAAP Net cash used in financing activities                                    (3,659)              (1,500)        (6,879)             (1,376)
Less: Net cash provided by (used in) IPTV financing activities                -                    -              -                   -
Non-GAAP Net cash used in financing activities                                (3,659)              (1,500)        (6,879)             (1,376)
Effect of exchange rate changes on cash and cash equivalents                  2,087                761            (1,176)             4,933
Non-GAAP Net decrease in cash and cash equivalents in continuing operations     (6,325)              (13,208)       (21,539)            (29,915)
Non-GAAP Net increase (decrease) in cash and cash equivalents in IPTV disposed  (58,664)             1,540          (67,685)            (19,703)
operation
Cash and cash equivalents at beginning of period                              277,391              313,557        301,626             351,507
Cash and cash equivalents at end of period                                    $ 212,402           $ 301,889      $ 212,402           $ 301,889



SOURCE UTStarcom, Inc.

Website: http://www.utstar.com
Contact: Jing Ou-Yang of UTStarcom Holdings Corp., +86-10-8520-5153, or
jouyang@utstar.com; or May Shen (Beijing), or +86-10-8591-1951, or
May.Shen@fticonsulting.com, or Daniel DelRe (Hong Kong), +852-3768-4547, or
Daniel.DelRe@fticonsulting.com, or Eric Boyriven (New York), +1-212-850-5671,
or Eric.Boyriven@fticonsulting.com, all of FTI Consulting, for UTStarcom