UTStarcom Reports Unaudited Fourth Quarter and Full Year 2012 Financial Results
UTStarcom Reports Unaudited Fourth Quarter and Full Year 2012 Financial
Results
PR Newswire
BEIJING, March 18, 2013
BEIJING, March 18, 2013 /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 fourth quarter and full year ended December 31,
2012.
As previously announced, the Company closed the divestiture of its IPTV
business in August 2012 but has not yet met the requirements for reporting
those results as discontinued operations because of the Company's continuing
involvement. Therefore, to enable a comparison of results excluding the IPTV
business and the amortization of PHS deferred revenue the Company is including
non-GAAP comparisons throughout this press release.
UTStarcom President and Chief Executive Officer, Mr. William Wong, stated,
"2012 was a year of significant transition for UTStarcom and a period during
which we accomplished several important milestones. Of primary importance, we
executed a plan to exit the IPTV equipment business and launched a new
strategy designed to transform the Company into a higher growth, more
profitable business focused on providing next generation media operational
support services and higher value-added broadband equipment offerings. In
support of this new strategy, we began making strategic investments in new
partners, such as aioTV, and bolstered our relationship with iTV. Both of
these actions will allow us to build and deploy a TV over IP services
platform. In addition, we used our robust cash position to help build
long-term value for our shareholders by continuing to repurchase stock and
effecting a tender offer that was completed in early 2013. In all, we have
returned a total of $45 million to shareholders since 2011."
"While there is a great deal more to do, we are very pleased with the positive
initial progress that is underway. We believe our clearly defined new strategy
positions us well in the evolving media environment to capture growth
opportunities in 2013 and beyond. We expect this will result in stronger and
more predictable financial results over time as well as enable us to deliver
enhanced value for UTStarcom's long-term and very loyal shareholders."
Full Year 2012 Milestones and Operating Highlights
o Successfully closed the divestiture of the underperforming IPTV business.
o Outlined a new strategy to transform the Company into a higher growth,
more profitable business.
o Invested in new partnerships that will progress the strategy to take
significant stakes in companies that have market leading technology and
will bolster the roll-out of subscription-based, value-added media
services across Asia and other markets.
o Strengthened the executive management team and added a new independent
director to the Board.
Fourth Quarter and Full Year 2012 Financial Performance Highlights
o Fourth quarter and full year 2012 non-GAAP revenues decreased 13.0% and
12.2% year-over-year to $41.0 million and $157.3 million.
o Fourth quarter and full year 2012 non-GAAP gross margin was 32.4% and
34.3%, respectively, compared to 34.3% and 40.6%, respectively, for the
corresponding period of 2011.
o Fourth quarter non-GAAP net loss attributable to UTStarcom shareholders
was $6.7 million, or non-GAAP basic loss per share of $0.05, compared to
2011 fourth quarter non-GAAP net loss of $2.7 million, or non-GAAP basic
loss per share of $0.02.
o Full year 2012 non-GAAP net loss attributable to UTStarcom shareholders
was $16.4 million, or non-GAAP basic loss per share of $0.11, compared to
full year 2011 non-GAAP net income of $2.5 million, or non-GAAP basic
income per share of $0.02.
o Cash, cash equivalents and short-term investments were $179.9 million as
of December 31, 2012.
o Allocated $45 million to execute shareholder value building initiatives
including a tender offer and share repurchase.
UTStarcom Chief Financial Officer Mr. Robert Pu stated, "The fourth quarter
trends followed closely what we experienced in the third quarter yet a shift
in sales mix to less profitable products offset an increase in equipment sales
relative to third quarter levels and impacted results. Despite this shift, we
were able to achieve our full year 2012 gross margin goal of approximately
35%. In addition, we made good progress on stabilizing our operating expenses
and we will maintain strict cost control going forward. Furthermore, our
balance sheet remains strong with a December 31, 2012 cash position of
approximately $180 million. This has allowed us to invest in new partnerships,
consistently buy back shares, and complete a tender offer. We will continue
to efficiently manage working capital so we can fund our planned strategic
initiatives and build out higher margin products and services to strengthen
the business and financial performance."
Fourth Quarter and Full Year 2012 Financial Results
As part of a plan to transition the Company into higher growth, more
profitable areas, UTStarcom successfully closed the divestiture of its IPTV
business on August 31, 2012. As of December 31, 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 financial results in
year-to-date and future periods, 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. The Company's 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 fourth quarter of 2012 were $43.3 million,
a decrease of 48.2% year-over-year from $83.5 million for the corresponding
period of 2011. Total revenues for the twelve months ended December 31, 2012
were $186.7 million, a decrease of 41.8% year-over-year from $320.6 million
for the corresponding period of 2011.
UTStarcom's non-GAAP total revenues for the fourth quarter of 2012 were $41.0
million, a decrease of 13.0% year-over-year from $47.1 million for the
corresponding period of 2011. Non-GAAP total revenues for the twelve months
ended December 31, 2012 were $157.3 million, a decrease of 12.2%
year-over-year from $179.1 million for the corresponding period of 2011.
Three months ended December 31, 2012 and 2011
o Non-GAAP net sales from equipment for the fourth quarter of 2012 were
$34.7 million, a decrease of 14.7% 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.
o Non-GAAP net sales from equipment-based services for the fourth quarter of
2012 were $6.3 million, a decrease of 2.0% year-over-year.
Twelve months ended December 31, 2012 and 2011
o Non-GAAP net sales from equipment for the twelve months ended December 31,
2012 were $133.8 million, a decrease of 9.8% 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.
o Non-GAAP net sales from equipment-based services for the twelve months
ended December 31, 2012 were $23.2 million, a decrease of 24.5%
year-over-year. The decrease was mainly due to fewer NGN product-related
services provided in 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 $13.7 million, or 31.7% of net sales, for the
fourth quarter of 2012, compared to $28.6 million, or 34.2% of net sales, for
the corresponding period of 2011. Gross profit was $68.2 million, or 36.5% of
net sales, for the twelve months ended December 31, 2012, compared to $114.3
million, or 35.7% of net sales, for the corresponding period of 2011.
UTStarcom's non-GAAP gross profit was $13.3 million, or 32.4% of net sales,
for the fourth quarter of 2012, compared to $16.2 million, or 34.3% of net
sales, for the corresponding period of 2011. Non-GAAP gross profit was $54.0
million, or 34.3% of net sales, for the twelve months ended December 31, 2012,
compared to $72.8 million, or 40.6% of net sales, for the corresponding period
of 2011.
Three months ended December 31, 2012 and 2011
o Non-GAAP gross profit for equipment sales for the fourth quarter of 2012
was $13.0 million, a decrease of 20.3% year-over-year. Non-GAAP gross
margin for equipment sales for the fourth quarter of 2012 was 37.5%,
compared to 40.1% for the corresponding period in 2011. The margin
decrease was primarily due to increased sales of MSAN products, which have
relatively lower gross margins compared to PTN products, in the fourth
quarter of 2012.
o Non-GAAP gross profit for equipment-based services for the fourth quarter
of 2012 was $0.3 million, compared to gross loss of $54 thousand for the
corresponding period of 2011. Gross margin for equipment-based services
for the fourth quarter of 2012 was 4.7%, compared to negative 0.8% for the
corresponding period of 2011. The margin increase was primarily due to
higher margin of MSTP and NGN product-related services provided in the
fourth quarter of 2012.
Twelve months ended December 31, 2012 and 2011
o Non-GAAP gross profit for equipment sales for the twelve months ended
December 31, 2012 was $51.4 million, a decrease of 21.2% year-over-year.
Gross margin for equipment sales for the twelve months ended December 31,
2012 was 38.4%, compared to 44.0% for the corresponding period of 2011.
The margin decrease was primarily due to higher equipment gross margin
generated from $7.4 million in 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.
o Non-GAAP gross profit for equipment-based services for the twelve months
ended December 31, 2012 was $2.7 million, a decrease of 65.9%
year-over-year. Gross margin for equipment-based services for the twelve
months ended December 31, 2012 was 11.4%, compared to 25.3% for the
corresponding period of 2011. The margin decrease was primarily due to
fewer NGN product-related services provided in 2012, while fixed services
costs remained relatively constant.
Operating Expenses
Operating expenses for the fourth quarter of 2012 were $16.7 million, a
decrease of 16.7% year-over-year, from $20.0 million for the corresponding
period in 2011. Operating expenses for the twelve months ended December 31,
2012 were $99.5 million, an increase of 6.9% year-over-year from $93.1 million
for the corresponding period of 2011.
Non-GAAP operating expenses for the fourth quarter of 2012 were $16.9 million,
an increase of 17.1% year-over-year, from $14.4 million for the corresponding
period in 2011. Non-GAAP operating expenses for the twelve months ended
December 31, 2012 were $68.8 million, an increase of 10.1% year-over-year,
from $62.5 million for the corresponding period of 2011.
Three months ended December 31, 2012 and 2011
o Non-GAAP SG&A expenses in the fourth quarter of 2012 were $11.9 million,
an increase of 19.3% year-over-year. The increase was primarily due to an
increase in consulting fees and the accelerated amortization of Beijing
office leasehold improvement due to early termination, which was partially
offset by decrease in personnel costs as a result of restructuring
efforts.
o Non-GAAP R&D expenses in the fourth quarter of 2012 were $4.3 million, an
increase of 0.2% year-over-year.
o Non-GAAP impairment of goodwill and other long-lived assets in the fourth
quarter of 2012 were $1 million due to investment impairment on GCT
SemiConductor.
o Non-GAAP net gain on divestitures in the fourth quarter of 2012 was $0.2
million, compared to $0.4 million in 2011.
Twelve months ended December 31, 2012 and 2011
o Non-GAAP SG&A expenses for the twelve months ended December 31, 2012 were
$46.9 million, a decrease of 5.5% year-over-year. The decrease was
primarily due to a decrease in personnel costs and the fixed cost as a
result of our restructuring efforts which were partially offset by the
increased consulting fees and the accelerated amortization of Beijing
office leasehold improvement due to early termination.
o Non-GAAP R&D expenses for the twelve months ended December 31, 2012 were
$20.5 million, an increase of 49.1% year-over-year. The increase was
primarily due to an increase in consulting fees for several strategic
outsourced design projects.
o Non-GAAP impairment of goodwill and other long-lived assets for the twelve
months ended December 31, 2012 were $1.8 million due to investment
impairment on GCT SemiConductor and Xalted Networks.
o Non-GAAP amortization of intangible assets for the twelve months ended
December 31, 2012 was approximately $0.5 million compared to $1.2 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.
o Non-GAAP restructuring costs for the twelve months ended December 31, 2012
were approximately $0.4 million, a decrease of 85.0% year-over-year. The
decrease was primarily the result of the restructuring plan of year 2009
which was completed in 2012.
o Non-GAAP net gain on divestitures for the twelve months ended December 31,
2012 was $1.3 million, a decrease of 72.3% year-over-year. The gain
related to 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.
o GAAP net loss on divestiture for the twelve months ended December 31, 2012
was $16.2 million, an increase of $20.7 million year-over-year, which
mainly due to the loss related to the divestiture of IPTV business.
Operating Loss
Operating loss for the fourth quarter of 2012 was $3.0 million, compared to
operating income of $8.5 million for the corresponding period of 2011.
Operating loss for the twelve months ended December 31, 2012 was $31.4
million, compared to operating income of $21.2 million for the corresponding
period of 2011.
Non-GAAP operating loss for the fourth quarter of 2012 was $3.6 million,
compared to non-GAAP operating income of $1.8 million for the corresponding
period of 2011. Non-GAAP operating loss for the twelve months ended December
31, 2012 was $14.8 million, compared to non-GAAP operating income of $10.3
million for the corresponding period of 2011.
Other Income (Expense), Net
Three months ended December 31, 2012 and 2011
Net other expense for the fourth quarter of 2012 was $4.6 million compared to
net other expense of $5.4 million for the corresponding period of 2011. Net
other expense in the fourth quarter of 2012 primarily consisted of $4.7
million of foreign exchange loss as a result of depreciation of JPY against
USD in the quarter. Net other expense for the fourth quarter of 2011 primarily
consisted of a $5.4 million foreign exchange loss attributed to the
depreciation of INR against USD in the quarter.
Twelve months ended December 31, 2012 and 2011
Net other expense for the twelve months ended December 31, 2012 was $3.0
million compared to net other expense of $8.6 million for the corresponding
period in 2011. Net other expense for the twelve months ended December 31,
2012 primarily consisted of income of $1.5 million resulting from the release
of a portion of the reserve related to tax liabilities provided to the buyers
of UTStarcom's subsidiary in Korea due to the expiration of the statute of
limitation, and $4.7 million of foreign exchange loss as a result of
depreciation of JPY against USD in 2012. Net other expense for the twelve
months ended December 31, 2011 primarily consisted of $8.9 million of foreign
exchange loss, mainly attributed to the depreciation of the INR against USD in
the first nine months of 2011.
Net Income (Loss)
Net loss attributable to UTStarcom shareholders for the fourth quarter and the
twelve months of 2012 was $6.4 million and $33.2 million, respectively. Net
income attributable to UTStarcom shareholders for the fourth quarter and the
twelve months of 2011 was $4.1 million and $13.4 million, respectively. Basic
loss per share for the fourth quarter and the twelve months of 2012 amounted
to $0.05 and $0.23, respectively. Basic income per share for the fourth
quarter and the twelve months of 2011 was $0.03 and $0.09, respectively.
The non-GAAP net loss attributable to UTStarcom shareholders for the fourth
quarter and the twelve months of 2012 was $6.7 million and $16.4 million,
respectively. Non-GAAP net loss attributable to UTStarcom shareholders for the
fourth quarter of 2011 was $2.7 million and non-GAAP net income attributable
to UTStarcom shareholders for the twelve months of 2011 was $2.5 million.
Non-GAAP basic loss per share for the fourth quarter and the twelve months of
2012 amounted to $0.05 and $0.11, respectively. Non-GAAP basic loss per share
for the fourth quarter of 2011 was $0.02 and non-GAAP basic income per share
for the twelve months of 2011 was $0.02.
Cash Flow
o Net cash used by operating activities for the fourth quarter of 2012 was
$6.4 million.
o Non-GAAP net cash used by operating activities for the fourth quarter of
2012 was $6.4 million.
o Cash used by investing activities for the fourth quarter of 2012 was $20.8
million, primarily driven by the closing of the IPTV divestiture as well
as $11.0 million in investments in iTV Media and aioTV.
o Non-GAAP cash used by investing activities for the fourth quarter of 2012
was $17.8 million, primarily driven by the Company's $11.0 million in
investments in iTV Media and aioTV.
o Cash used in financing activities for the fourth quarter of 2012 was $2.0
million, primarily for repurchasing shares of the Company's common stock.
As of December 31, 2012, UTStarcom had cash and cash equivalents and
short-term investments of $179.9 million.
Overview of Recent Key Events
New Strategy
In mid-2012, the Company divested its underperforming IPTV equipment business
and announced its new strategic plan to drive growth and profitability and
enhance shareholder value. The plan includes three primary strategies: deploy
a TV over IP Services Platform, pursue internal product development and
strategic acquisitions to build out these new services, and design an optimal
operating structure to maximize the potential of business units and foster
innovation, collaboration and efficiency.
New Partnerships
In the last several months, the Company has invested in and expanded strategic
partnerships as part of the roll-out of its new strategy. These are intended
to build momentum in 2013 as well as accelerate UTStarcom's ongoing transition
into a higher growth business and becoming a next generation media service
provider.
o The Company acquired a 44% stake in aioTV Inc., a leading international
cloud-based video aggregation and distribution platform, becoming its
largest investor. The transaction gives the Company access to technology
that will bolster its rollout of subscription-based value added media
services.
o The Company made significant progress in the introduction of media
operational support services, as its partner, iTV Media, of which the
Company is the single largest investor, launched new ventures in Thailand
and Spain.
o iTV Media announced it will deploy its IPTV and video on demand (VOD)
services in Spain in January 2013 through a strategic partnership
with Mira TV.
o iTV Media announced a launch of the MeTV IPTV service in Thailand in
October 2012 through a strategic partnership with a leading national
telecommunications services provider.
o In October 2012 the Company expanded its partnership with Chunghwa Telecom
to further strengthen its broadband services in Taiwan.
Returning Cash to Shareholders
UTStarcom has been actively working to enhance value for its long-term
shareholders. The Company completed a US$30 million cash tender offer in the
first quarter of 2013 for 25,000,000 of the Company's outstanding ordinary
shares at a purchase price of US$1.20 per share. In addition, the Company's
continued commitment to its share repurchase program reflects management's
long-term confidence in the Company. As of December 31, 2012, the Company has
repurchased approximately 12.5 million shares, amounting to $15.0 million
worth of the cumulative total under the current $20 million shares repurchase
program.
NASDAQ Listing Qualification Compliance
UTStarcom will hold an extraordinary general meeting of its shareholders on
March 21, 2013 to vote on a plan to effect a 3:1 reverse share split with the
goal of increasing the liquidity of the shares and increase the trading price
per share. On March 15, 2013, the Company received formal notice from NASDAQ
that it was not in compliance with the listing requirements relating to the
price per share at which the Company's shares trade. The Company has 180 days
to regain compliance with the listing standards. The Company expects the
reverse share split to increase the trading price and bring the Company into
compliance.
Business Outlook
The Company currently views 2013 as a year of investment and continued
transition. At the same time, the Company presently expects to achieve a
degree of incremental improvement in overall financial performance versus
2012. There will be a need to replace unprofitable revenue that was removed
with the IPTV divestiture and revenue will be below last year while this
process is on-going and the top line is in transition. At the same time, the
Company will focus on holding margins relatively stable by maintaining
a similar product mix to 2012 as well as making additional progress with
lowering operating expenses.
Importantly, the Company's current outlook is based on constant currency rates
versus 2012.
Looking further ahead, the new strategic plan 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, 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 this line of the
business exceeding 50% in that same timeframe.
Mr. Wong concluded, "As we look ahead, we are aware that this is a year that
will require focus and hard work as we invest in and build a platform for the
future. However, we are confident that our new strategy will translate into
accelerated rates of growth and significant overall improvement in the
Company's business performance beginning in 2014 and we are excited about the
long-term opportunities before us."
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.
Fourth Quarter 2012 Conference Call Details
UTStarcom's management will host an earnings conference call at 7:30 a.m. U.S.
Eastern Time on March 18, 2013 (7:30 p.m. Beijing/Hong Kong Time on March 18,
2013).
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 10026253.
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 March 26, 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 10026253.
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 effects of the reverse split, the Company's investment, revenue,
and gross margin and cash flow expectations for 2013. 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
December 31, December 31,
2012 2011
ASSETS (In thousands, except par value)
Current assets:
Cash, cash equivalents and short-term $ 179,880 $ 303,998
investments
Accounts and notes receivable, net 15,000 20,216
Inventories and deferred costs 151,500 137,484
Prepaids and other current assets 40,960 42,099
Total current assets 387,340 503,797
Long-term assets:
Property, plant and equipment, net 8,866 12,199
Goodwill - 13,820
Intangible assets, net - 3,625
Long-term deferred costs 20,556 39,741
Other long-term assets 72,564 27,758
Total assets $ 489,326 $ 600,940
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 24,991 $ 23,530
Customer advances 89,362 82,589
Deferred revenue 41,461 64,989
Other current liabilities 35,154 52,679
Total current liabilities 190,968 223,787
Long-term liabilities:
Long-term deferred revenue and other 80,467 106,114
liabilities
Total liabilities 271,435 329,901
Total equity 217,891 271,039
Total liabilities and equity $ 489,326 $ 600,940
UTStarcom Holdings Corp.
Unaudited Condensed Consolidated Statements of Operations
Three months ended December 31, Twelve months ended December 31,
2012 2011 2012 2011
(in thousands, except per share data)
Net sales $ 43,274 $ 83,465 $ 186,728 $ 320,576
Cost of net sales 29,572 54,915 118,570 206,242
Gross profit 13,702 28,550 68,158 114,334
31.7 % 34.2 % 36.5 % 35.7 %
Operating expenses:
Selling, general and administrative 11,865 11,330 52,457 63,857
Research and development 4,281 8,532 28,131 30,123
Amortization of intangible assets - 310 516 1,239
Impairment of goodwill and other long-lived assets 955 26 1,808 26
Restructuring - 211 358 2,386
Net loss (gain) on divestiture (401) (361) 16,239 (4,546)
Total operating expenses 16,700 20,048 99,509 93,085
Operating income (loss) (2,998) 8,502 (31,351) 21,249
Interest income, net 815 821 2,372 2,061
Other expense, net (4,637) (5,400) (2,973) (8,615)
Income (loss) before income taxes (6,820) 3,923 (31,952) 14,695
Income taxes benefit(expense) 415 (457) (2,392) (2,918)
Net income (loss) (6,405) 3,466 (34,344) 11,777
Net loss attributable to noncontrolling interest (1) 604 1,194 1,610
Net income (loss) attributable to UTStarcom Holdings Corp. $ (6,406) $ 4,070 $ (33,150) $ 13,387
Net income (loss) per share attributable to UTStarcom
Holdings $ (0.05) $ 0.03 $ (0.23) $ 0.09
Corp. -- Basic
Weighted average shares outstanding -- Basic 141,609 152,859 145,538 154,473
UTStarcom Holdings Corp.
Unaudited Condensed Consolidated Statements of Cash Flows
Three months ended December 31, Twelve months ended December 31,
2012 2011 2012 2011
(In thousands)
CASH FLOWS FROM
OPERATING
ACTIVITIES:
Net income (loss) (6,405) $ $ (34,344) $
3,466 11,777
Adjustments to
reconcile net loss to
net cash provided by
(used in) operating
activities:
Depreciation and 871 854 3,949 3,082
amortization
Amortization of
deferred gain on - - - (625)
sale-leaseback
Provision for
(recovery of ) (117) (1,267) (1,154) 2,212
doubtful accounts
Stock-based 567 458 2,982 3,029
compensation expense
Net loss(gain) on (416) (361) 16,241 (4,546)
divestitures
Other-than-temporary
impairment of equity 954 450 1,808 450
investments
Deferred income (1,746) 273 (1,866) 712
taxes
Other 958 (71) 879 (467)
Changes in operating
assets and
liabilities,net of (1,029) (3,954) (14,113) (57,341)
effect of iTV
deconsolidation
Net cash used in (6,363) (152) (25,618) (41,717)
operating activities
CASH FLOWS FROM
INVESTING
ACTIVITIES:
Additions to
property, plant and (335) (1,626) (5,445) (9,347)
equipment
Net proceeds from 85 181 220 215
divestitures
Change in restricted (2,357) 1,235 (1,129) 5,478
cash
Contribution of
equity investment - (7,119)
through a shareholder
loan
Deconsolidation of - - (6,841) -
ITV
Payment for IPTV
divestiture and (3,045) - (56,010) -
convertible bond
Purchase of an (15,602) (420) (15,602) (1,181)
investment interest
Purchase of
short-term - (1,074) (2,267) (8,365)
investments
Proceeds from sale
of short-term 422 2,729 4,300 9,039
investments
Other (3) (176) 26 519
Net cash (provided
by ) used in (20,835) 849 (82,748) (10,761)
investing activities
CASH FLOWS FROM
FINANCING
ACTIVITIES:
Issuance of ordinary
share upon exercise - - - 124
of options
Repurchase of (1,963) (4,801) (8,842) (6,301)
ordinary share
Net cash used in (1,963) (4,801) (8,842) (6,177)
financing activities
Effect of exchange
rate changes on cash (3,657) 3,841 (4,834) 8,774
and cash equivalents
Net decrease in cash (32,818) (263) (122,042) (49,881)
and cash equivalents
Cash and cash
equivalents at 212,402 301,889 301,626 351,507
beginning of period
Cash and cash $ $
equivalents at end of 179,584 $ 301,626 $ 179,584 301,626
period
UTSTARCOM HOLDINGS CORP.
March 18, 2013 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.
Twelve Twelve
Qtr ended months Qtr ended months
ended ended
31-Dec-11 31-Dec-11 31-Dec-12 31-Dec-12
Non-GAAP Revenue $47,093 $179,126 $40,992 $157,257
Non-GAAP Gross Profit $16,156 $72,799 $13,300 $53,999
Non-GAAP Gross Margin % 34.3% 40.6% 32.4% 34.3%
Non-GAAP Operating Income (Loss) $1,754 $10,319 ($3,566) ($14,784)
Non-GAAP Net Income (Loss) attributable to UTStarcom ($2,678) $2,457 ($6,741) ($16,350)
Non-GAAP Net Income (Loss) per Share Attributable to UTStarcom ($0.02) $0.02 ($0.05) ($0.11)
Holdings Corp. -- Basic
Please refer to the preceding reconciliation tables for the adjustments to GAAP Revenue, Gross Profit,
Operating Income (Loss), Net Income (Loss) and EPS.
UTSTARCOM HOLDINGS CORP.
March 18, 2013 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ 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.
Twelve months Twelve
Qtr ended ended Qtr ended months
ended
31-Dec-11 31-Dec-11 31-Dec-12 31-Dec-12
GAAP Revenue (a) $83,465 $320,576 $43,274 $186,728
Less:
Amortization of $23,949 $95,327 - -
PHS Revenue
Less: IPTV $12,423 $46,123 $2,282 $29,470
Revenue
Non-GAAP Revenue $47,093 $179,126 $40,992 $157,257
(a) GAAP Revenue for each period is the consolidated revenue as reported on
Form 10-Q or Form 6-K, as applicable, for such period.
UTSTARCOM HOLDINGS CORP.
March 18, 2013 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ 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 Twelve months Qtr ended Twelve months
ended ended
31-Dec-11 31-Dec-11 31-Dec-12 31-Dec-12
GAAP Gross Profit $28,550 $114,334 $13,702 $68,158
(a)
GAAP Gross Margin 34.2% 35.7% 31.7% 36.5%
%
Less: Gross Profit
from Amortization of 8,331 33,148 - -
PHS Revenue
Less: Gross Profit 4,063 8,387 402 14,159
from IPTV Revenue
Non-GAAP Gross $16,156 $72,799 $13,300 $53,999
Profit
Non-GAAP Gross 34.3% 40.6% 32.4% 34.3%
Margin %
(a) GAAP Gross Profit and GAAP Gross Margin % for each period is the
consolidated gross profit and gross margin % as reported on
Form 10-Q or Form 6-K, as applicable, for such period.
UTSTARCOM HOLDINGS CORP.
March 18, 2013 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ 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.
Twelve Twelve
Qtr ended months Qtr ended months
ended ended
31-Dec-11 31-Dec-11 31-Dec-12 31-Dec-12
GAAP Operating $20,048 $93,085 $16,700 $99,509
Expenses(a)
Less: Operating
Expenses $5,647 $30,605 ($167) $30,725
directly related
to IPTV
Non-GAAP
Operating $14,401 $62,480 $16,867 $68,784
Expenses
(a) GAAP Operating Expenses for each period is the consolidated Operating
Expenses as reported on Form 6-K, as applicable, for such period.
UTSTARCOM HOLDINGS CORP.
March 18, 2013 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ 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 Twelve months Qtr ended Twelve months
ended ended
31-Dec-11 31-Dec-11 31-Dec-12 31-Dec-12
GAAP Operating $8,502 $21,249 ($2,998) ($31,351)
Income (Loss) (a)
Less: Profit from
Amortization of PHS $8,331 $33,148 - -
Revenue
Less: Profit from $4,063 $8,387 $402 $14,159
IPTV Revenue
Less: Operating
Expenses directly $5,647 $30,605 ($167) $30,725
related to IPTV
Non-GAAP Operating $1,754 $10,319 ($3,566) ($14,784)
Income (Loss)
(a) GAAP Operating Income (Loss) for each period is the consolidated operating
loss as reported on Form 6-K, as applicable, for such period.
UTSTARCOM HOLDINGS CORP.
March 18, 2013 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ 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 Twelve months Qtr ended Twelve months
ended ended
31-Dec-11 31-Dec-11 31-Dec-12 31-Dec-12
GAAP Income taxes
benefit ($457) ($2,918) $415 ($2,392)
(expense)(a)
Less: Income tax
expenses directly $0 $0 ($233) ($233)
related to IPTV
Non-GAAP Income
taxes benefit ($457) ($2,918) $648 ($2,159)
(expense)
(a) GAAP Income taxes benefit (expense) for each period is the consolidated
Operating Expenses as reported on Form 6-K, as applicable, for such period.
UTSTARCOM HOLDINGS CORP.
March 18, 2013 Conference Call
RECONCILIATION OF GAAP AND NON-GAAP FINANCIAL DATA
($ 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.
Twelve Twelve
Qtr ended months Qtr ended months
ended ended
31-Dec-11 31-Dec-11 31-Dec-12 31-Dec-12
GAAP Net Income
(Loss) attributable $4,070 $13,387 ($6,406) ($33,150)
to UTStarcom(a)
Less: Profit from
Amortization of PHS $8,331 $33,148 - -
Revenue
Less: Profit from $4,063 $8,387 $402 $14,159
IPTV Revenue
Less: Operating
Expenses directly $5,647 $30,605 ($167) $30,725
related to IPTV
Less: Income tax
benefit(expense) $0 $0 ($233) ($233)
directly related to
IPTV
Non-GAAP Net Income
(Loss) attributable ($2,678) $2,457 ($6,741) ($16,350)
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.
March 18, 2013 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.
Twelve months Twelve
Qtr ended ended Qtr ended months
ended
31-Dec-11 31-Dec-11 31-Dec-12 31-Dec-12
GAAP Net Income
(Loss) attributable $4,070 $13,387 ($6,406) ($33,150)
to UTStarcom(a)
Less: Profit from
Amortization of PHS $8,331 $33,148 $0 $0
Revenue
Less: Profit from $4,063 $8,387 $402 $14,159
IPTV Revenue
Less: Operating
Expenses from IPTV $5,647 $30,605 ($167) $30,725
Related
Less: Income tax
benefit(expense) $0 $0 ($233) ($233)
directly related to
IPTV
Non-GAAP Net Income
(Loss) attributable ($2,678) $2,457 ($6,741) ($16,350)
to UTStarcom
Weighted Average
Shares 152,859 154,473 141,609 145,538
Outstanding—Basic
GAAP Net Income
(Loss) per Share
Attributable to 0.03 0.09 (0.05) (0.23)
UTStarcom Holdings
Corp. -- Basic
Non-GAAP Net Income
(Loss) per share
attributable to (0.02) 0.02 (0.05) (0.11)
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
Three months ended Twelve months ended
December 31, December 31,
2012 2011 2012 2011
(In thousands)
CASH FLOWS FROM OPERATING
ACTIVITIES:
GAAP Net cash used in operating (6,363) (152) (25,618) (41,717)
activities
Less: Net cash provided
by (used in) IPTV operating (5,429) (14,241) (25,037)
activities
Non-GAAP Net cash (6,363) 5,277 (11,377) (16,680)
used in operating activities
CASH FLOWS FROM INVESTING
ACTIVITIES:
GAAP Net cash provided by (used (20,835) 849 (82,748) (10,761)
in) investing activities
Less: Net cash provided by (used (3,045) (403) (36,489) (498)
in) IPTV investing activities
Non-GAAP Net cash (17,790) 1,252 (46,259) (10,263)
used in investing activities
CASH FLOWS FROM FINANCING
ACTIVITIES:
GAAP Net cash used in financing (1,963) (4,801) (8,842) (6,177)
activities
Less: Net cash provided by (used - - - -
in) IPTV financing activities
Non-GAAP Net cash provided by (1,963) (4,801) (8,842) (6,177)
(used in) financing activities
Effect of exchange rate changes (3,657) 3,841 (4,834) 8,774
on cash and cash equivalents
Non-GAAP Net decrease in cash and
cash equivalents in continuing (29,773) 5,569 (71,312) (24,346)
operations
Non-GAAP Net increase (decrease)
in cash and cash equivalents in (3,045) (5,832) (50,730) (25,535)
IPTV
disposed operation
Cash and cash equivalents at 212,402 301,889 301,626 351,507
beginning of period
Cash and cash equivalents at end $ $ $ $
of period 179,584 301,626 179,584 301,626
SOURCE UTStarcom, Inc.
Website: http://www.utstar.com
Contact: Jing Ou-Yang, UTStarcom Holdings Corp., +86-10-8520-5153,
jouyang@utstar.com; May Shen (Beijing), +86-10-8591-1951,
May.Shen@fticonsulting.com; Daniel DelRe (Hong Kong), +852-3768-4547,
Daniel.DelRe@fticonsulting.com; Eric Boyriven (New York), +212-850-5671,
Eric.Boyriven@fticonsulting.com
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