UTStarcom Reports Unaudited Financial Results for the Third Quarter of 2013

 UTStarcom Reports Unaudited Financial Results for the Third Quarter of 2013

PR Newswire

BEIJING, Nov. 14, 2013

BEIJING, Nov. 14, 2013 /PRNewswire/ -- UTStarcom Holdings Corp. ("UTStarcom"
or "the Company") (NASDAQ: UTSI), a leading provider of media operational
support services and broadband products and services, today reported its
unaudited financial results for the quarter ended September 30, 2013.

As previously announced, the Company closed the divestiture of its IPTV
business in August 2012, but did not meet 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.

"We are pleased to report strong financial results for the third quarter of
2013 which further validate the healthy trends in our underlying business,"
said Mr. William Wong, UTStarcom's President and Chief Executive Officer. "Our
top line performance improved year over year, and we continued our effective
cost control and productivity measures, which helped to drive positive
operating cash flow during the quarter. Moreover, in this quarter we launched
a series of new product innovations that deliver on UTStarcom's vision of
providing 'simple network, simple operation' to our customers. In addition, we
continued to grow and diversify the customer base for our broadband business,
notching new customer wins with large local incumbent service providers in
Taiwan, Indonesia and Brazil. We believe our aggregate year-to-date results
showcase the improvements in our business and are a testament to the strategic
plan and quality of the new management team that is charged with its
execution. Going forward, the Company is committed to continuing to execute
the strategic plan to transform UTStarcom into a higher-growth, more
profitable business focused on providing next generation media services and
broadband equipment products. We expect this will enable us to drive
profitable growth and deliver sustained shareholder value over the long term."

Third Quarter 2013 Highlights

  oGAAP cash provided by operating activities for the third quarter of 2013
    was $3.7 million, compared to $7.5 million cash used by operating
    activities for the third quarter of 2012.
  oNon-GAAP cash provided by operating activities for the third quarter of
    2013 was $3.7 million, compared to $1.8 million cash used by operating
    activities for the third quarter of 2012.
  oGAAP revenues in the third quarter of 2013 were $41.2 million, a 2.2%
    increase from $40.3 million in the third quarter of 2012.
  oNon-GAAP revenues in the third quarter of 2013 were $40.9 million, a 10.5%
    increase from $37.0 million in the third quarter of 2012.
  oGAAP gross margin for the third quarter of 2013 was 28.7%, compared to
    35.5% for the third quarter of 2012, mainly due to the depreciation of the
    Japanese yen against the U.S. dollar.
  oNon-GAAP gross margin for the third quarter of 2013 was 28.9%, compared to
    34.4% for the third quarter of 2012, mainly due to the depreciation of the
    Japanese yen against the U.S. dollar.
  oGAAP operating expenses for the third quarter of 2013 were $11.6 million,
    a 71.7% decrease from $41.0 million for the third quarter of 2012.
  oNon-GAAP operating expenses for the third quarter of 2013 were $11.6
    million, a 38.3% decrease from $18.9 million for the third quarter of
    2012.
  oGAAP net income attributable to UTStarcom's shareholders was $0.4 million
    and GAAP basic net income per share was $0.01 for the third quarter of
    2013, compared to GAAP net loss attributable to UTStarcom's shareholders
    of $20.8 million and GAAP basic net loss per share of $0.43 for the third
    quarter of 2012.
  oNon-GAAP net income attributable to UTStarcom's shareholders was $0.4
    million and non-GAAP basic net income per share was $0.01 for the third
    quarter of 2013, compared to non-GAAP net loss attributable to UTStarcom's
    shareholders of $0.17 million and non-GAAP basic net loss per share of
    $nil for the third quarter of 2012.
  oAs of September 30, 2013, cash, cash equivalents and short-term
    investments were $120.4 million.

Mr. Robert Pu, UTStarcom's Chief Financial Officer, commented, "We delivered a
strong quarter of bottom line improvement, driven by growth on the top line
and continued progress in lowering operating expenses through our focused cost
reduction efforts and leaner, more efficient operations. Moreover, we
delivered another quarter of positive operating cash flow which again
demonstrates the operational efficiency improvements across our business.
Looking ahead, we will keep our focus on vigilant cost control, cash
generation and executing our new strategic initiatives. We will continue to
use our strong cash position of approximately $120.4 million to invest in our
growth plan designed to increase shareholder value."

Third Quarter 2013 Financial Results

As part of a plan to transition the Company into higher-growth and more
profitable areas, UTStarcom successfully closed the divestiture of its IPTV
business on August 31, 2012. As of September 30, 2013, 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 are discussed at the end of this press release.

Total Revenues

Three months ended September 30, 2013 and 2012

Total revenues for the third quarter of 2013 were $41.2 million, an increase
of 2.2% from $40.3 million for the corresponding period in 2012.

Non-GAAP total revenues for the third quarter of 2013 were $40.9 million, an
increase of 10.5% from $37.0 million for the corresponding period in 2012.

  oNon-GAAP net sales from equipment for the third quarter of 2013 were $35.5
    million, an increase of 10.8% from $32.0 million for the corresponding
    period in 2012. The increase was mainly due to increased sales of Packet
    Transport Network ("PTN") and value added resell products, which were
    partially offset by the decreased sales of Multi-Service Access Network
    ("MSAN") and Multi-Service Transfer Platform ('MSTP") products.
  oNon-GAAP net sales from equipment-based services for the third quarter of
    2013 were $5.4 million, an increase of 8.2% from $5.0 million for the
    corresponding period in 2012. The increase was mainly due to the increased
    sales of MSAN product related services.

Nine months ended September 30, 2013 and 2012

Total revenues for the nine months ended September 30, 2013, were $126.1
million, a decrease of 12.1% from $143.5 million for the corresponding period
in 2012.

Non-GAAP total revenues for the nine months ended September 30, 2013 were
$125.0 million, an increase of 7.5% from $116.3 million for the corresponding
period in 2012.

  oNon-GAAP net sales from equipment for the nine months ended September 30,
    2013 were $107.1 million, an increase of 8.1% from $99.1 million for the
    corresponding period in 2012. The increase was mainly due to the increased
    sales of PTN and value added resell products, which were partially offset
    by the decreased sales of MSAN products.
  oNon-GAAP net sales from equipment-based services for the nine months ended
    September 30, 2013 were $17.9 million, an increase of 5.8% from $16.9
    million for the corresponding period in 2012. The increase was mainly due
    to the increased sales of MSAN and PTN product related services, which
    were partially offset by decreased sales of Next Generation Network
    ("NGN") product related services.

Gross Profit

Three months ended September 30, 2013 and 2012

Gross profit was $11.8 million and gross margin was 28.7% for the third
quarter of 2013, compared to $14.3 million and 35.5%, respectively, for the
corresponding period in 2012.

Non-GAAP gross profit was $11.8 million and non-GAAP gross margin was 28.9%
for the third quarter of 2013, compared to $12.7 million and 34.4%,
respectively, for the corresponding period in 2012.

  oNon-GAAP gross profit for equipment sales for the third quarter of 2013
    was $12.3 million, a decrease of 0.8% from $12.4 million for the
    corresponding period in 2012. Non-GAAP gross margin for equipment sales
    for the third quarter of 2013 was 34.6%, compared to 38.7% for the
    corresponding period in 2012. The decrease in gross margin was primarily
    caused by the decreased gross margin in PTN and MSAN products mainly
    attributable to the depreciation of Japanese yen against the U.S. dollar,
    which were partially offset by the increased gross margin of MSTP
    products.
  oNon-GAAP gross profit for equipment-based services for the third quarter
    of 2013 was negative $0.5 million, compared to gross profit of $0.3
    million for the corresponding period in 2012. Gross margin for
    equipment-based services for the third quarter of 2013 was negative 8.8%,
    compared to 6.6% for the corresponding period in 2012. The decrease in
    gross margin was primarily caused by the decreased gross margin in Gigabit
    Ethernet Capable Passive Optical Network ("GEPON") and MSAN product
    related services mainly due to the depreciation of Japanese yen against
    the U.S. dollar, which were partially offset by the increased gross margin
    of PTN product related services.

Nine months ended September 30, 2013 and 2012

Gross profit was $33.1 million and gross margin was 26.2% for the nine months
ended September 30, 2013, compared to $54.5 million and 38.0%, respectively,
for the corresponding period in 2012.

Non-GAAP gross profit was $33.1 million and non-GAAP gross margin was 26.4%
for the nine months ended September 30, 2013, compared to $40.7 million and
35.0%, respectively, for the corresponding period in 2012.

  oNon-GAAP gross profit for equipment sales for the nine months ended
    September 30, 2013 was $33.8 million, a decrease of 12.2% from $38.4
    million for the corresponding period in 2012. Non-GAAP gross margin for
    equipment sales for the nine months ended September 30, 2013 was 31.5%,
    compared to 38.8% for the corresponding period in 2012. The decrease in
    gross margin was primarily caused by the decreased gross margins in PTN
    and MSAN products mainly due to the depreciation of Japanese yen against
    the U.S. dollar, which was partially offset by the increased gross margin
    of MSTP products.
  oNon-GAAP gross profit for equipment-based services for the nine months
    ended September 30, 2013 was negative $0.7 million, compared to gross
    profit of $2.4 million for the corresponding period in 2012. Gross margin
    for equipment-based services for the nine months ended September 30, 2013
    was negative 4.0%, compared to 13.9% for the corresponding period in 2012.
    The decrease in gross margin was primarily caused by the decreased gross
    margin in MSAN products mainly due to the depreciation of Japanese yen
    against the U.S. dollar.

Operating Expenses

Three months ended September 30, 2013 and 2012

Operating expenses for the third quarter of 2013 were $11.6 million, a
decrease of 71.7% from $41.0 million for the corresponding period in 2012.

Non-GAAP operating expenses for the third quarter of 2013 were $11.6 million,
a decrease of 38.3% from $18.9 million for the corresponding period in 2012.

  oNon-GAAP selling, general and administrative expenses in the third quarter
    of 2013 were $7.9 million, a decrease of 37.3% from $12.6 million for the
    corresponding period in 2012. The decrease was mainly due to the decreased
    personnel-related costs as a result of the Company's restructuring
    efforts, and decreased legal expenses.
  oNon-GAAP research and development expenses in the third quarter of 2013
    were $4.1 million, a decrease of 31.4% from $6.0 million for the
    corresponding period in 2012. The decrease was mainly due to the decreased
    research and development personnel costs as a result of the Company's
    restructuring efforts and reduced outsourced design services.
  oNon-GAAP net gain on divestiture in the third quarter of 2013 was $0.4
    million, compared to non-GAAP net gain of $0.4 million in the
    corresponding period in 2012. The net gain on divestiture in the third
    quarter of 2013 was due to the divestiture of the Company's DOCSIS-EOC
    business. As of September 30, 2013, the payment has been fully received.

Nine months ended September 30, 2013 and 2012

Operating expenses for the nine months ended September 30, 2013 were $37.9
million, a decrease of 54.3% from $82.8 million for the corresponding period
in 2012.

Non-GAAP operating expenses for the nine months ended September 30, 2013 were
$37.9 million, a decrease of 27.1% from $51.9 million for the corresponding
period in 2012.

  oNon-GAAP selling, general and administrative expenses in the nine months
    ended September 30, 2013 were $26.1 million, a decrease of 25.6% from
    $35.0 million for the corresponding period in 2012. The decrease was
    mainly due to the decreased personnel costs as a result of the Company's
    restructuring efforts and decreased legal expenses which were partially
    offset by the increased depreciation expenses due to acceleration of
    depreciation upon early termination of a lease on the Hangzhou facility.
  oNon-GAAP research and development expenses in the nine months ended
    September 30, 2013 were $10.3 million, a decrease of 36.2% from $16.2
    million for the corresponding period in 2012. The decrease was mainly due
    to a decrease in research and development personnel costs as a result of
    the Company's restructuring efforts and reduced outsourced design
    services.
  oNon-GAAP net loss on divestiture in the nine months ended September 30,
    2013 was $1.3 million, compared to non-GAAP net gain of $1.0 million in
    the corresponding period in 2012. The net loss on divestiture was due to
    the loss on disposal of NGN related assets, which was partially offset by
    the gain on the divestiture of the Company's DOCSIS-EOC business.

Operating Income (Loss)

Three months ended September 30, 2013 and 2012

Operating income for the third quarter of 2013 was $0.2 million, compared to
operating loss of $26.7 million for the corresponding period in 2012.

Non-GAAP operating income for the third quarter of 2013 was $0.2 million,
compared to non-GAAP operating loss of $6.1 million for the corresponding
period in 2012.

Nine months ended September 30, 2013 and 2012

Operating loss for the nine months ended September 30, 2013 was $4.8 million,
compared to operating loss of $28.4 million for the corresponding period in
2012.

Non-GAAP operating loss for the nine months ended September 30, 2013 was $4.8
million, compared to non-GAAP operating loss of $11.2 million for the
corresponding period in 2012.

Other Income (Expense), Net

Three months ended September 30, 2013 and 2012

Net other income for the third quarter of 2013 was $0.8 million, compared to
net other income of $6.3 million for the corresponding period of 2012. Net
other income in the third quarter of 2013 primarily consisted of $0.8 million
of foreign exchange gain, which was mainly from the appreciation of RMB
against the U.S. dollar during this quarter. Net other income in the third
quarter of 2012 primarily consisted of $6.1 million of foreign exchange gain,
which was mainly from the appreciation of INR against the U.S. dollar.

Nine months ended September 30, 2013 and 2012

Net other income for the nine months ended September 30, 2013 was $4.6
million, compared to net other income of $1.7 million for the corresponding
period of 2012. Net other income in the first nine months of 2013 primarily
consisted of $2.8 million of foreign exchange gain, which was mainly from the
appreciation of RMB against the U.S. dollar and $1.3 million from the release
of the reserve for tax indemnification provided to the buyers of our
subsidiary in Korea as a result of the expiration of the statute of
limitations.

Equity Pick Up of Losses of an Associate

Equity pick up of losses of an associate was $2.3 million for the third
quarter of 2013 and $6.7 million for the first nine months of 2013, due to 49%
loss pick up from the Company's equity investment in iTV Media.

The Company consolidated iTV Media during the period from October 2010 to June
2012, as the Company held a controlling interest in iTV Media during that
period. Upon the exercising of share repurchase rights in June 2012, the
Company's investment in iTV Media decreased to only non-controlling preference
shares in iTV Media. At that point, the Company deconsolidated iTV Media and
accounted for the investment using the cost method starting from June 2012, as
the preference shares of iTV Media owned by the Company were not considered as
in-substance common stock.

In January 2013, the Company invested in an additional $5.0 million
convertible bond issued by iTV Media, which triggered a reassessment of the
Company's accounting for its investment in the preference shares. Due to the
additional convertible bond investment, the preference shares of iTV Media
owned by the Company now substantively participated in the risks and rewards
of iTV Media, irrespective of the liquidation preferences, and were considered
as in-substance common stock. Therefore, the equity method criteria had been
met and the equity accounting commenced in the first quarter of 2013.

In the second quarter of 2013, the Company further invested in an additional
$15.0 million convertible bonds issued by iTV Media.

iTV Media was deconsolidated by the Company in June 2012, as a result, no loss
from iTV Media was consolidated in the third quarter of 2012. The Company
consolidated a net loss from iTV Media of $3.1 million for the first nine
months of 2012.

Net Income (Loss)

Three months ended September 30, 2013 and 2012

Net income attributable to UTStarcom's shareholders for the third quarter of
2013 was $0.4 million, compared to net loss attributable to UTStarcom's
shareholders of $20.8 million for the corresponding period in 2012. Basic net
income per share for the third quarter of 2013 was $0.01, compared to basic
net loss per share of $0.43 for the third quarter of 2012.

Non-GAAP net income attributable to UTStarcom's shareholders for the third
quarter of 2013 was $0.4 million, compared to non-GAAP net loss attributable
to UTStarcom's shareholders of $0.17 million for the corresponding period in
2012. Non-GAAP basic net income per share for the third quarter of 2013 was
$0.01, compared to non-GAAP basic net loss per share of $nil for the third
quarter of 2012.

Nine months ended September 30, 2013 and 2012

Net loss attributable to UTStarcom's shareholders for the nine months ended
September 30, 2013 was $6.7 million, compared to net loss attributable to
UTStarcom's shareholders of $26.7 million for the corresponding period in
2012. Basic net loss per share for the third quarter of 2013 was $0.17,
compared to basic net loss per share of $0.54 for the nine months ended
September 30, 2012.

Non-GAAP net loss attributable to UTStarcom's shareholders for the nine months
ended September 30, 2013 was $6.7 million, compared to non-GAAP net loss
attributable to UTStarcom's shareholders of $9.6 million for the corresponding
period in 2012. Non-GAAP basic net loss per share for the nine months ended
September 30, 2013 was $0.17, compared to non-GAAP basic net loss per share of
$0.19 for the nine months ended September 30, 2012.

Cash Flow

  oCash generated from operating activities for the third quarter of 2013 was
    $3.7 million.
  oCash used in investing activities for the third quarter of 2013 was $2.3
    million, mainly due to a $1.2 million payment for NGN divestiture.
  oCash used in financing activities for the third quarter of 2013 was $2.7
    million, mainly due to a $2.7 million collection and payment timing of the
    AR factoring facility with a bank.
  oCash generated from operating activities for the nine months ended
    September 30, 2013 was $1.9 million.
  oCash used in investing activities for the nine months ended September 30,
    2013 was $22.3 million, mainly due to a $20 million convertible bond
    invested into iTV Media.
  oCash used in financing activities for the nine months ended September 30,
    2013 was $30.7 million, due to a $30 million share repurchase program.

As of September 30, 2013, UTStarcom had cash, cash equivalents and short-term
investments of $120.4 million.

Overview of Recent Key Events

Withdrawal of Non-Binding Going Private Proposal

On November 1, 2013, the Company announced that the Special Committee of its
Board of Directors has received a notice from one of the directors of the
Company, Mr. Hong Liang Lu, and entities affiliated with him, and Shah Capital
Opportunity Fund LP ("Shah Capital") and Mr. Himanshu H. Shah that they have
unanimously determined to withdraw the non-binding going private proposal
dated March 27, 2013. The Company has been told that recent market conditions
and the initial stage of the Company's ongoing transition into a
higher-growth, more profitable business focused on providing next generation
media services and broadband equipment products have made for a challenging
deal environment, and this impacted the ability for Shah Capital group to
secure financing for the proposed going private transaction.

Appointment of New Director

Effective November 1, 2013, the Company's Board of Directors appointed Mr.
Himanshu H. Shah as a new director. Mr. Shah opts to receive no compensation
for his directorship. With Mr. Shah's appointment, UTStarcom's Board of
Directors will consist of eight directors.

Mr. Shah currently serves as the founder, president and chief investment
officer of Shah Capital and he has more than twenty years of experience in the
global capital markets. Mr. Shah received his master of business
administration degree from the University of Akron and his bachelor of
commerce degree from Gujarat University in India.

Mr. Wong continued, "We welcome Mr. Shah to our Board of Directors and look
forward to working with him and management to improve UTStarcom for the
benefit of all of our shareholders, by enhancing all aspects of our business,
from our product and service offerings, to service, to employee and customer
relations."

Business Outlook

While overarching trends in the first nine months of the year have indicated
healthy and improving trends in the underlying business, the Company continues
to view 2013 as a year of investment and continued transition.

The Company is reiterating its expectations for the full year 2013.
Unprofitable revenues that were removed with the IPTV divestiture will need to
be replaced and as a result, total revenues for 2013 are expected to decrease
from 2012 while revenue sources are in transition. Additionally, gross margin
may continue to experience some headwinds from the depreciation of the
Japanese yen against the U.S. dollar as sales in Japan account for a large
portion of the Company's total revenues. However, if Japanese yen exchange
rates remain the same as they are now and the Company successfully continues
to generate efficiencies from operations, the Company still expects that for
2013 it will achieve a degree of incremental improvement in overall financial
performance compared to 2012.

Please note that the Company's current outlook is based on Japanese yen
exchange rates remaining the same as they are now.

From a long-term perspective, the Company expects that its balanced focus on
strategic initiatives and continuing investment in its value-added broadband
business will result in a more profitable and competitive business model. The
Company continues to expect profit from the new TV over IP services to become
the major contributor for UTStarcom by 2015, as the new TV over IP business is
expected to have gross margin exceeding 50%.

Mr. Wong concluded, "As we move into the end of 2013, we remain comfortable
with our operating expectations for full year 2013. In addition, we remain
optimistic about the long-term opportunities before us. We are confident that
while it will take time and hard work, our clearly defined strategy positions
us very well in the quickly changing and diverse media environment. Our board
of directors and the management team will work closely together to drive our
strategic plan forward and to explore all appropriate opportunities to
maximize value for all our shareholders."

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 financial measures, which are
adjusted from results based on GAAP to exclude the effects of the results of
its divested IPTV business and PHS-related deferred revenue amortization from
the results of each reported period. 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 results from IPTV-related business that may
not be indicative of the Company's 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
for and forecasting future periods. These non-GAAP financial measures also
facilitate management's internal comparisons of the Company's current
performance to its historical performance. The Company computes its non-GAAP
financial measures on a consistent basis 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. The presentation
of this additional information is not meant to be considered in isolation or
as a substitute for financial information prepared in accordance with GAAP.

Third Quarter 2013 Conference Call Details

The Company's management will host an earnings conference call at 7:00 a.m.
U.S. Eastern Time on November 14, 2013 (8:00 p.m. Beijing/Hong Kong Time on
November 14, 2013).

The conference call dial-in numbers are as follows:

United States: +1-877-870-4263
International: +1-412-317-0790
Canada:        +1-855-669-9657
Hong Kong:     06-800-20175
China:         4001-201203

The conference ID number is 10036827.

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 21, 2013.

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 10036827.

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 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 website at
http://www.utstar.com.

Forward-Looking Statements

This press release includes forward-looking statements, including statements
regarding the Company's strategic initiatives and the Company's business
outlook. 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
strategic 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 the Company assumes no obligation to
update any such forward-looking statements.



UTStarcom Holdings Corp.

Unaudited Condensed Consolidated Balance Sheets
                                      September 30,          December 31,
                                      2013                   2012
ASSETS                                (In thousands, except par value)
Current assets:
Cash, cash equivalents and            $             $       
short-term investments                120,436                179,880
Accounts and notes receivable, net    14,718                 15,000
Inventories and deferred costs        119,629                151,500
Prepaids and other current assets     34,955                 40,960
Total current assets                  289,738                387,340
Long-term assets:
Property, plant and equipment, net    7,551                  8,866
Goodwill                              -                      -
Intangible assets, net                -                      -
Long-term deferred costs              10,878                 20,556
Other long-term assets                82,480                 71,329
Total assets                          $             $       
                                      390,647                488,091
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                      $            $        
                                      23,496                 24,991
Customer advances                     76,213                 89,362
Deferred revenue                      29,366                 41,461
Other current liabilities             32,600                 35,154
Total current liabilities             161,675                190,968
Long-term liabilities:
Long-term deferred revenue and other  55,653                 80,467
liabilities
Total liabilities                     217,328                271,435
Total equity                          173,319                216,656
Total liabilities and equity          $             $       
                                      390,647                488,091



UTStarcom Holdings Corp.

Unaudited Condensed Consolidated Statements of Operations
                                                                                       Three months       Nine months ended
                                                                                       ended September    September 30,
                                                                                       30,
                                                                                       2013     2012      2013      2012
                                                                                       (in thousands, except per share data)
                                                                                       $     $      $      $   
Net sales                                                                                                    
                                                                                       41,217  40,328   126,135  143,454
Cost of net sales                                                                      29,393   26,010    93,075    88,998
Gross profit                                                                           11,824   14,318    33,060    54,456
                                                                                       28.7 %   35.5 %    26.2 %    38.0 %
Operating expenses:
Selling,generalandadministrative                       7,897    14,842    26,073    40,592
Research and development                                                               4,104    8,243     10,330    23,850
Amortizationofintangibleassets  -        -         -         516
Impairment of goodwill and other long-lived assets                                    -        854       134       854
Restructuring                                                                          -        (191)     -         358
Net loss (gain) on divestiture                                                         (367)    17,297    1,318     16,640
Total operating expenses                                                               11,634   41,045    37,855    82,810
Operating income (loss)                                                                190      (26,727)  (4,795)   (28,354)
Interest income, net                                                                   89       363       346       1,556
Other income, net                                                                      773      6,252     4,621     1,665
Equity pick up of losses of an associate                                               (2,327)  -         (6,703)   -
Income (loss) before income taxes                                                      (1,275)  (20,112)  (6,531)   (25,133)
Income taxes benefit(expense)                                                          1,708    (649)     (145)     (2,806)
Net income (loss)                                                                      433      (20,761)  (6,676)   (27,939)
Net loss attributable to noncontrolling interest                                       -        -         9         1,195
                                                                                       $     $      $      $   
Net income (loss) attributable to UTStarcom Holdings Corp.                                                 
                                                                                        433   (20,761)  (6,667)   (26,744)
Net income (loss) per share attributable to UTStarcom                                  $     $      $      $   
                                                                                                          
Holdings Corp.-Basic                                                                    0.01   (0.43)   (0.17)    (0.54)
Weighted average shares outstanding-Basic                                              38,958   47,896    39,113    49,400



UTStarcom Holdings Corp.

Unaudited Condensed Consolidated Statements of Cash Flows
                                                                                                       Three months ended  Nine months ended
                                                                                                       September 30,       September 30,
                                                                                                       2013     2012       2013      2012
                                                                                                       (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
                                                                                                       $     $      $      $    
Net Income (Loss)                                                                                                               
                                                                                                         433  (20,761)  (6,676)   (27,939)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and                                                                                      992      796        2,749     3,078
amortization
Provision for (recovery of ) doubtful accounts                                                        133      54         (67)      (1,037)
Stock-based compensation expense                                                                      472      1,175      1,189     2,415
Net loss(gain) on divestitures                                                                        (367)    17,314     1,318     16,657
Net loss on disposal of assets                                                                       20       -          1,283     -
Gain on release of tax liability due to expiration of the status liminitaion                          -        -          (1,240)   -
Deferred income taxes                                                                                 12       100        140       (120)
Loss from equity investments, net                                                                     2,327    -          6,703     -
Other-than-temporary impairment of equity investments                                                 -        854        134       854
Other                                                                                                 -        52         -         (79)
Changes in operating assets and liabilities:                                                          (364)    (7,035)    (3,620)   (13,084)
Net cash provided by (used in) operating activities                                                   3,658    (7,451)    1,913     (19,255)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment                                                            (664)    (2,217)    (2,989)   (5,165)
Net proceeds from divestitures                                                                        408      -          1,993     135
Change in restricted cash                                                                            (794)    (277)      1,478     1,228
Payment for NGN                                                                                      (1,198)  -          (2,156)   -
Cash decrease due to deconsolidation of a subsidiary                                                  -        -          -         (6,841)
Payment for IPTV divestiture and convertible bond                                                     -        (52,965)   (503)     (52,965)
Purchase of an investment interest                                                                    -        -          (21,592)  -
Proceeds from disposition of an investment interest                                                   -        -          569       -
Purchase of short-term investments                                                                    -        (500)      (79)      (2,267)
Proceeds from sale of short-term investments                                                          -        44         293       3,878
Other                                                                                                 (3)      (51)       163       83
Net cash used in investing activities                                                                 (2,251)  (55,966)   (22,823)  (61,914)
CASH FLOWS FROM FINANCING ACTIVITIES:
Refund for the AR factoring                                                                           (2,722)  -          -         -
Repurchase of ordinary share                                                                          -        (3,659)    (30,680)  (6,879)
Net cash used in financing activities                                                                 (2,722)  (3,659)    (30,680)  (6,879)
Effect of exchange rate changes on cash and cash equivalents                                          (2,905)  2,087      (7,639)   (1,176)
Net decrease in cash and cash equivalents                                                             (4,220)  (64,989)   (59,229)  (89,224)
Cash and cash equivalents at beginning of period                                                      124,575  277,391    179,584   301,626
                                                                                                       $     $      $      $    
Cash and cash equivalents at end of period                                                                           120,355      
                                                                                                       120,355  212,402             212,402



UTSTARCOM HOLDINGS CORP.

Nov 14, 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.
                     Qtr ended    Nine months    Qtr ended   Nine months
                                  ended                      ended
                     30-Sep-13    30-Sep-13      30-Sep-12   30-Sep-12
Non-GAAP Revenue     $40,903      $125,038       $37,026     $116,265
Non-GAAP Gross       $11,824      $33,060        $12,734     $40,700
Profit
 Non-GAAP Gross    28.9%        26.4%          34.4%       35.0%
Margin %
Non-GAAP Operating   $190         ($4,795)       ($6,133)    ($11,218)
Income (Loss)
Non-GAAP Net Income
(Loss) attributable  $433         ($6,667)       ($167)      ($9,608)
to UTStarcom
Non-GAAP Net Income
(Loss) per Share
Attributable to      $0.01        ($0.17)        -           ($0.19)
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.

Nov 14, 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   Nine months   Qtr ended   Nine months
                               ended                     ended
                   30-Sep-13   30-Sep-13     30-Sep-12   30-Sep-12
GAAP Revenue (a)   $41,217     $126,135      $40,328     $143,454
Less: Amortization -           -             -           -
of PHS Revenue
Less: IPTV Revenue $314        $1,097        3,302       $27,189
Non-GAAP Revenue   $40,903     $125,038      $37,026     $116,265
(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.

Nov 14, 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   Nine months   Qtr ended   Nine months
                                 ended                     ended
                     30-Sep-13   30-Sep-13     30-Sep-12   30-Sep-12
GAAP Gross Profit    $11,824     $33,060       $14,318     $54,456
(a)
 GAAP Gross Margin 28.7%       26.2%         35.5%       38.0%
%
Less: Gross Profit
from Amortization of -           -             -           -
PHS Revenue
Less: Gross Profit   -           -             $1,584      $13,756
from IPTV Revenue
Non-GAAP Gross       $11,824     $33,060       $12,734     $40,700
Profit
 Non-GAAP Gross    28.9%       26.4%         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 orn Form 10-Q or Form
6-K, as applicable, for such period.



UTSTARCOM HOLDINGS CORP.

Nov 14, 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   Nine months   Qtr ended   Nine months
                              ended                     ended
                  30-Sep-13   30-Sep-13     30-Sep-12   30-Sep-12
GAAP Operating    $11,634     $37,855       $41,045     $82,810
Expenses(a)
Less: Operating
Expenses directly -           -             $22,178     $30,892
related to IPTV
Non-GAAP
Operating         $11,634     $37,855       $18,867     $51,918
Expenses
(a) GAAP Operating Expenses for each period is the consolidated Operating
Expenses as reported on Form 10-Q or Form 6-K, as applicable, for such
period.



UTSTARCOM HOLDINGS CORP.
November 14, 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   Nine months   Qtr ended   Nine months
                                 ended                     ended
                     30-Sep-13   30-Sep-13     30-Sep-12   30-Sep-12
GAAP Operating       $190        ($4,795)      ($26,727)   ($28,354)
Income (Loss) (a)
Less: Profit from
Amortization of PHS  -           -             -           -
Revenue
Less: Profit from   -           -             $1,584      $13,756
IPTV Revenue
Less: Operating
Expenses directly    -           -             $22,178     $30,892
related to IPTV
Non-GAAP Operating   $190        ($4,795)      ($6,133)    ($11,218)
Income (Loss)
(a) GAAP Operating Income (Loss) for each period is the consolidated
operating loss as reported on Form 10-Q or Form 6-K, as applicable, for
such period.



UTSTARCOM HOLDINGS CORP.

November 14, 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   Nine months  Qtr ended  Nine months
                                     ended                   ended
                         30-Sep-13   30-Sep-13    30-Sep-12  30-Sep-12
GAAP Income taxes        $1,708      ($145)       ($649)     ($2,806)
benefit(expense)(a)
Less: Income tax
expenses directly        -           -            -          -
related to IPTV
Non-GAAP Income taxes    $1,708      ($145)       ($649)     ($2,806)
benefit(expense)
(a) GAAP Income taxes benefit(expense) for each period is the consolidated
Operating Expenses as reported on Form 10-Q or Form 6-K, as applicable, for
such period.



UTSTARCOM HOLDINGS CORP.
November 14, 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   Nine months   Qtr ended   Nine months
                                   ended                     ended
                       30-Sep-13   30-Sep-13     30-Sep-12   30-Sep-12
GAAP Net Income (Loss)
attributable to        $433        ($6,667)      ($20,761)   ($26,744)
UTStarcom(a)
Less: Profit from
Amortization of PHS    -           -             -           -
Revenue
Less: Profit from     -           -             $1,584      $13,756
IPTV Revenue
Less: Operating
Expenses directly      -           -             $22,178     $30,892
related to IPTV
Less: Income tax
benefit(expense)       -           -             -           -
directly related to
IPTV
Non-GAAP Net Income
(Loss) attributable to $433        ($6,667)      ($167)      ($9,608)
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 14, 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.
                                                                                                        Qtrended Ninemonthsended Qtrended Ninemonthsended
                                                                                                        30-Sep-13   30-Sep-13         30-Sep-12   30-Sep-12
GAAP Net Income (Loss) attributable to UTStarcom(a)                                                     $433        ($6,667)          ($20,761)   ($26,744)
Less: Profit from Amortization of PHS Revenue                                                          -           -                 -           -
Less:ProfitfromIPTVRevenue -           -                 $1,584      $13,756
Less: Operating Expenses from IPTV Related                                                              -           -                 $22,178     $30,892
Less: Income tax benefit(expense) directly related to IPTV                                              -           -                 -           -
Non-GAAP Net Income (Loss) attributable to UTStarcom                                                    $433        ($6,667)          ($167)      ($9,608)
Weighted Average Shares Outstanding-Basic                                                               38,958      39,113            47,896      49,400
GAAP Net Income (Loss) per Share Attributable to UTStarcom Holdings
                                                                                                        $0.01       ($0.17)           ($0.43)     ($0.54)
Corp.-Basic
Non-GAAP Net Income (Loss) per share attributable to UTStarcom
                                                                                                        $0.01       ($0.17)           ($0.00)     ($0.19)
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.

 November 14, 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.
                       Three months ended          Nine months ended
                       September 30,                September 30,
                       2013           2012          2013          2012
                       (In thousands)
CASH FLOWS FROM
OPERATING
ACTIVITIES:
GAAP Net cash
provided by (used      $3,658         ($7,451)      $1,913        ($19,255)
in) operating
activities
 Less:
Net cash provided
by (used in) IPTV     -              (5,602)       -             (14,241)
operating
activities

Non-GAAP Net cash
provided by (used      3,658          (1,849)       1,913         (5,014)
in) operating
activities

CASH FLOWS FROM
INVESTING
ACTIVITIES:
GAAP Net cash
provided by (used      (2,251)        (55,966)      (22,823)      (61,914)
in) investing
activities
Less: Net cash
provided by (used      -              (53,062)      (503)         (53,444)
in) IPTV investing
activities

Non-GAAP Net cash      (2,251)        (2,904)       (22,320)      (8,470)
used in investing
activities
CASH FLOWS FROM
FINANCING
ACTIVITIES:
GAAP Net cash
provided by (used      (2,722)        (3,659)       (30,680)      (6,879)
in) financing
activities
Less: Net cash
provided by (used      -              -             -             -
in) IPTV financing
activities
Non-GAAP Net cash
used in financing      (2,722)        (3,659)       (30,680)      (6,879)
activities
Effect of exchange
rate changes on        (2,905)        2,087         (7,639)       (1,176)
cash and cash
equivalents
Non-GAAP Net
decrease in cash
and cash
equivalents in         (4,220)        (6,325)       (58,726)      (21,539)
continuing

operations
Non-GAAP Net
increase (decrease)
in cash and cash       -              (58,664)      (503)         (67,685)
equivalents in IPTV

disposed operation
Cash and cash
equivalents at         124,575        277,391       179,584       301,626
beginning of period
Cash and cash
equivalents at end     $120,355       $212,402      $120,355      $212,402
of period





SOURCE UTStarcom Holdings Corp.

Website: http://www.utstar.com
Contact: Jane Zuo, UTStarcom Holdings Corp., +86-10-8520-5153,
jane.zuo@utstar.com or May Shen (Beijing), +86-10-8591-1951,
May.Shen@fticonsulting.com or Daniel DelRe (Hong Kong), +852-3768-4547,
Daniel.DelRe@fticonsulting.com or Rob Dougherty (San Francisco),
+1-415-293-4427, Rob.Dougherty@fticonsulting.com