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UTStarcom Announces a Corporate Restructuring and Initiatives to Improve Financial Performance

ALAMEDA, Calif., Dec. 18 /PRNewswire-FirstCall/ -- UTStarcom, Inc.
(Nasdaq: UTSI) today announced a series of corporate initiatives that are
expected to reduce its annualized operating expenses by more than 25% or
greater than $100 million. The majority of these measures will have been
initiated by the end of January 2009 and a significant portion of the savings
will be recognized in the first half of 2009.

UTStarcom Announces a Corporate Restructuring and Initiatives to Improve Financial Performance
UTStarcom Announces a Corporate Restructuring and Initiatives to Improve Financial Performance

- Actions Expected to Result in Annual Savings of 25% or $100 Million

(Logo: https://www.newscom.com/cgi-bin/prnh/20051013/SFTH063LOGO)

The actions announced today represent a continuation of the strategic plan
UTStarcom outlined in September of 2007. Since the beginning of this year the
company has divested a number of non-core business units and increased its net
cash position by $150 million.

'Over the past twelve months, we have achieved a year-over-year OPEX
reduction of 20% and streamlined our business to improve our competitive and
financial position,' said
Peter Blackmore, UTStarcom's CEO and president.
'These additional measures will reduce our annualized expense base by another
25% or $100 million. Importantly, these actions will advance our strategic
goals by increasing our focus on our IP-based portfolio targeting the
developing regions of the world.'

Rationalization of Non-Core Businesses

On December 16, 2008 UTStarcom initiated actions to wind down its
Korea-based handset manufacturing operation whose principal activity is
supplying handsets to Personal Communications Devises LLC. This wind down will
occur over the next six months to enable the company to meet current customer
commitments in North America and the process will be complete by July 2009.
The company's Handset segment will continue to supply handsets to the China
market.

Additionally, the company has initiated actions to disband its Custom
Solutions Business Unit by the end of the first quarter 2009.

Additional 10% Savings Through Headcount and SG&A Reductions

In the fourth quarter 2008 and first quarter 2009 the company will reduce
its global employee base by approximately 10%. This reduction is in addition
to the employees impacted by the identified non-core business rationalizations
discussed above.

In addition, the company also announced that the non-executive members of
the board have agreed to a reduction in their board retainers for a period of
one year. Furthermore,
Peter Blackmore, UTStarcom's CEO and president, and
other executive officers have voluntarily agreed to decline their cash bonuses
for 2008.

Although each geographic region and business will be affected,
management's plan will protect the most strategically important R&D
investments, customer relationships and product areas.

Consolidation of Back Office Functions in China

Over the past twelve months the company has implemented a number of IT
systems and operational enhancements. With the improved operational
capability, the company is now able to eliminate functional duplication and
consolidate a number of back office functions into our China operations. This
process will start in the first quarter of 2009 and be executed over the first
three quarters of 2009.

Restructuring Charge

In connection with the wind down of the Korea-based handset manufacturing
business the company expects to incur a restructuring charge of approximately
$10 million, consisting of write-downs of assets and one-time severance
benefits. This charge is expected to be taken in the fourth quarter of 2008.

The company also expects to incur a restructuring charge in connection
with the worldwide reduction in workforce not related to the wind down of the
Korea-based handset manufacturing of approximately $8 million comprised of
one-time severance benefits. This charge is also expected to be taken in the
fourth quarter of 2008.

Conference Call

The company will host a conference call to discuss the announcements. The
call will take place at 2:00 p.m. (PST) / 5:00 p.m. (EST) today, December 18,
2008
.

The conference call dial-in numbers are: United States and Canada
888-889-1058; International 706-634-2327. The conference ID number is
76385918.

A replay of the call will be available for 30 days. The conference call
replay numbers are as follows: United States -- 800-642-1687; International --
706-645-9291. The conference ID number is 76385918.

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

To listen to the live call, please go to the Web site at least 15 minutes
early to register, and to download and install any necessary audio software.
For those who cannot listen to the live broadcast, a replay will also be
available on this site.

Discussion of Pro Forma Non-GAAP Financial Measures

In order to provide both management and investors with a more complete
understanding of UTStarcom's underlying results and trends in light of the
planned wind down of its Korea-based handset manufacturing operation,
UTStarcom has prepared reconciliation tables for comparing GAAP results to
non-GAAP measures of revenues, gross profits, operating expenses and operating
profit (loss), along with an abbreviated, pro forma non-GAAP profit and loss
statement based on these non-GAAP measures. The pro forma non-GAAP measures
present the company's results as if both the July 2008 divestiture of the
company's Personal Communications Division and the wind down of the company's
Korea operation were completed prior to each time period below.

In addition, these pro forma 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
generally accepted accounting principles in the United States.

Forward-Looking Statements

This release includes forward-looking statements, including the foregoing
statements regarding the company's plan to reduce its operating expenses and
its global employee base, including the expected timing for completion of the
various aspects of the plan and the resulting magnitude and timing of expense
reductions, the company's ability to focus on its IP-based portfolio in
certain geographies, expectations that the company will continue to supply
handsets to the China market, expectations that management's plan will
protect the company's most strategically important R&D investments, customer
relationships and product areas, and the expected amount and timing of
restructuring charges associated with the plan. These statements are
forward-looking in nature and subject to risks and uncertainties that may
cause actual results to differ materially, including but not limited to the
risks that the company may not be able to implement its plan effectively, the
company may incur charges and cash expenditures in connection with its plan
that are higher than anticipated or in other fiscal periods than anticipated,
the plan may not strengthen the company's operating performance, the company
may not achieve anticipated cost savings due to increased expenses in other
areas of its business, and other risks identified in the company's latest
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K, as filed with the Securities and Exchange Commission.

About UTStarcom, Inc.

UTStarcom is a global leader in IP-based, end-to-end networking solutions
and international service and support. The company sells its solutions to
operators in both emerging and established telecommunications markets around
the world. UTStarcom enables its customers to rapidly deploy
revenue-generating access services using their existing infrastructure, while
providing a migration path to cost-efficient, end-to-end IP networks. Founded
in 1991 and headquartered in Alameda, California, the company has research and
development operations in the United States, China, Korea and India. For more
information about UTStarcom, visit the company's Web site at
https://www.utstar.com.



                               UTSTARCOM, INC.
                        December 18, 2008 Update Call


         RECONCILIATION OF GAAP REVENUE TO PRO FORMA NON-GAAP REVENUE
                               ($ in millions)
                                 (Unaudited)

To supplement our condensed consolidated financial statements presented on
a GAAP basis, UTStarcom uses certain pro forma non-GAAP measures which are
adjusted to present those metrics as if both PCD had been divested and Korea
BU had been wound down prior to each time period reflected below. 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 pro forma 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    Qtr    Qtr    Qtr     Year    Qtr    Qtr    Qtr
                     ended  ended  ended  ended   ended   ended  ended  ended
                       31-    30-    30-    31-     31-     31-    30-    30-
                      Mar-   Jun-   Sep-   Dec-    Dec-    Mar-   Jun-   Sep-
                       07     07     07     07      07      08     08     08
    GAAP Revenue (a)  $476   $538   $647   $806   $2,467   $586   $633   $181

    Less: PCD Segment
     Revenue (b)       288    358    458    560    1,664    431    449      -

    Less: Korea BU
     Sales to PCD (c)    -      -      -      -        -      -      -     35

    Non-GAAP Revenue  $188   $180   $189   $246     $803   $155   $184   $146

(a) GAAP Revenue for each period is the consolidated revenue as reported

        on Form 10-Q or Form 10-K, as applicable, for such period, except for
        the consolidated revenue for the quarter ended December 31, 2007,
        which is derived from the revenue reported in the Form 10-Qs and Form
        10-K with respect to fiscal year 2007.

(b) Effective July 1, 2008 the PCD segment was divested by the Company.

(c) Prior to the July 1, 2008 divestiture of PCD, Korea BU did not record

        revenue for units shipped to PCD as this activity was an intercompany
        transfer.  After July 1, 2008 this activity was recorded as a third
        party sale in the Handset segment.



                               UTSTARCOM, INC.
                        December 18, 2008 Update Call

    RECONCILIATION OF GAAP GROSS PROFIT TO PRO FORMA NON-GAAP GROSS PROFIT
                               ($ in millions)
                                 (Unaudited)

    To supplement our condensed consolidated financial statements presented on
a GAAP basis, UTStarcom uses certain pro forma non-GAAP measures which are
adjusted to present those metrics as if both PCD had been divested and Korea
BU had been wound down prior to each time period reflected below.  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 pro forma 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    Qtr    Qtr    Qtr     Year    Qtr    Qtr    Qtr
                      ended  ended  ended  ended   ended   ended  ended  ended
                        31-    30-    30-    31-     31-     31-    30-    30-
                       Mar-   Jun-   Sep-   Dec-    Dec-    Mar-   Jun-   Sep-
                        07     07     07     07      07      08     08     08
    GAAP Gross
     Profit (a)         $75    $80    $64    $102    $321    $92    $82    $57
       GAAP Gross
        Margin %        16%    15%    10%     13%     13%    16%    13%    31%

    Less: PCD Segment
     Gross Profit (b)    17     16     27     $34      94     33     36      -

    Less: Korea BU
     Gross Profit from
     Sales to PCD (c)     1      2      2       2       7      2      0      6

    Non-GAAP Gross
     Profit             $57     $62    $35     $66    $220    $57    $46   $51
       Non-GAAP Gross
        Margin %        30%     34%    19%     27%     27%    37%    25%   35%


(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 10-K, as applicable, for such period, except for the
        consolidated gross profit and gross margin % for the quarter ended
        December 31, 2007, which is derived from the gross profit and gross
        margin % reported in the Form 10-Qs and Form 10-K with respect to
        fiscal year 2007.

(b) Effective July 1, 2008 the PCD segment was divested by the Company.

(c) Prior to the July 1, 2008 divestiture of PCD, Korea BU earned a gross

        profit on the intercompany transfer of inventory to PCD.  This gross
        profit was recorded in the Handset segment.  After July 1, 2008 this
        activity was recorded as a third party transaction.



                               UTSTARCOM, INC.
                        December 18, 2008 Update Call

   RECONCILIATION OF GAAP OPERATING EXPENSE TO PRO FORMA NON-GAAP OPERATING
                                   EXPENSE
                               ($ in millions)
                                 (Unaudited)

To supplement our condensed consolidated financial statements presented on
a GAAP basis, UTStarcom uses certain pro forma non-GAAP measures which are
adjusted to present those metrics as if both PCD had been divested and Korea
BU had been wound down prior to each time period reflected below. 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 pro forma 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    Qtr    Qtr    Qtr     Year    Qtr    Qtr    Qtr
                      ended  ended  ended  ended   ended   ended  ended  ended
                        31-    30-    30-    31-     31-     31-    30-    30-
                       Mar-   Jun-   Sep-   Dec-    Dec-    Mar-   Jun-   Sep-
                        07     07     07     07      07      08     08     08
    GAAP Operating
     Expense (a)       $128    $135  $116  $154    $533    $123    $113   $92

    Less: PCD
     Operating
     Expense (b)          9       8     7     7      31       8       8     -

    Less: Korea
     BU Operating
     Expense (c)          7       8     8     8      31       9      10    10

    Non-GAAP
     Operating
     Expense           $112    $119  $101  $139    $471    $106     $95   $82

(a) GAAP Operating Expense for each period is the consolidated operating

        expense as reported on Form 10-Q or Form 10-K, as applicable, for such
        period, except for the consolidated operating expense for the quarter
        ended December 31, 2007, which is derived from the operating expenses
        reported in the Form 10-Qs and Form 10-K with respect to the fiscal
        year 2007.

(b) Effective July 1, 2008 the PCD segment was divested by the Company.

(c) Both prior to and after the July 1, 2008 divestiture of PCD, all

        direct operating expense relating to Korea BU has been recorded in the
        Handset segment.



                               UTSTARCOM, INC.
                        December 18, 2008 Update Call


         RECONCILIATION OF GAAP OPERATING LOSS TO PRO FORMA NON-GAAP
                                OPERATING LOSS
                               ($ in millions)
                                 (Unaudited)

To supplement our condensed consolidated financial statements presented on
a GAAP basis, UTStarcom uses certain pro forma non-GAAP measures which are
adjusted to present those metrics as if both PCD had been divested and Korea
BU had been wound down prior to each time period reflected below. 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 pro forma 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    Qtr    Qtr    Qtr     Year    Qtr    Qtr    Qtr
                      ended  ended  ended  ended   ended   ended  ended  ended
                        31-    30-    30-    31-     31-     31-    30-    30-
                       Mar-   Jun-   Sep-   Dec-    Dec-    Mar-   Jun-   Sep-
                        07     07     07     07      07      08     08     08
    GAAP Operating
     Loss (a)         ($53)  ($55)  ($52)  ($52)  ($212)   ($31)  ($31)  ($35)

    Less:  PCD
     Operating
     Profit (b)          8      8     20     27      63      25     28      -

    Less: Korea
     BU Operating
     Loss (c)           (6)    (6)    (6)    (6)    (24)     (7)   (10)    (4)

    Non-GAAP
     Operating Loss   ($55)  ($57)  ($66)  ($73)  ($251)   ($49)  ($49)  ($31)

(a) GAAP Operating Loss for each period is the consolidated operating

         loss as reported on Form 10-Q or Form 10-K, as applicable, for such
         period, except for the consolidated operating loss for the quarter
         ended December 31, 2007, which is derived from the operating loss
         reported in the Form 10-Qs and Form 10-K with respect to fiscal year
         2007.

(b) Effective July 1, 2008 the PCD segment was divested by the Company.

(c) Both prior to and after the July 1, 2008 divestiture of PCD, the

        operating loss relating to Korea BU has been recorded in the Handset
        segment.



                               UTSTARCOM, INC.
                        December 18, 2008 Update Call


               ABBREVIATED PRO FORMA NON-GAAP P&L STATEMENT (a)
                               ($ in millions)
                                 (Unaudited)

To supplement our condensed consolidated financial statements presented on
a GAAP basis, UTStarcom uses certain pro forma non-GAAP measures which are
adjusted to present those metrics as if both PCD had been divested and Korea
BU had been wound down prior to each time period reflected below. 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 pro forma 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    Qtr    Qtr    Qtr     Year    Qtr    Qtr    Qtr
                      ended  ended  ended  ended   ended   ended  ended  ended
                        31-    30-    30-    31-     31-     31-    30-    30-
                       Mar-   Jun-   Sep-   Dec-    Dec-    Mar-   Jun-   Sep-
                        07     07     07     07      07      08     08     08
    Non-GAAP Revenue  $188   $180   $189   $246     $803   $155   $184   $146

    Non-GAAP Gross
     Profit             57     62     35     66      220     57     46     51
       Non-GAAP Gross
        Margin %       30%    34%    19%    27%      27%    37%    25%    35%

    Non-GAAP Operating
     Expense           112    119    101    139      471    106     95     82

    Non-GAAP
     Operating Loss   ($55)  ($57)  ($66)  ($73)   ($251)  ($49)  ($49)  ($31)

    (a) Please refer to the preceding reconciliation tables for the
        adjustments to GAAP Revenue, Gross Profit, Operating Expense and
        Operating Loss.

SOURCE UTStarcom, Inc.