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UTStarcom Releases Financial Results for the Fourth Quarter and Full Year 2008

ALAMEDA, Calif., Feb. 26 /PRNewswire-FirstCall/ -- UTStarcom, Inc. (Nasdaq: UTSI) today reported financial results for the fourth quarter of 2008 and for the full year ended December 31, 2008.

UTStarcom Releases Financial Results for the Fourth Quarter and Full Year 2008
UTStarcom Releases Financial Results for the Fourth Quarter and Full Year 2008

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

On July 1, 2008 the Company divested its Personal Communications Division ('PCD') which has historically represented a significant portion of the Company's revenues. On December 18, 2008 the Company announced actions to wind down its Korea-based handset manufacturing operations by July 2009. To enable a comparison of the financial results for the Company on a year-over-year basis the Company has prepared certain pro forma non-GAAP results which present the Company's results as if both the divestiture of PCD and the wind down of the Company's Korea-based handset operations were completed prior to each time period presented. The reconciliation between GAAP and these pro forma non-GAAP financial measures is provided at the end of this press release and on the Company's website.

Fourth Quarter 2008 Financial Results

Net sales for the fourth quarter 2008 were $241 million as compared to $806 million in the fourth quarter of 2007. Gross margins for the fourth quarter 2008 were 12.4% as compared to 12.7% in the fourth quarter of 2007. The operating loss for the fourth quarter of 2008 and 2007 was $79 million and $53 million, respectively. The fourth quarter 2008 pro forma non-GAAP revenue was $149 million, the pro forma non-GAAP gross margin was 22.8% and the pro forma non-GAAP operating loss was $70 million. This compares to the fourth quarter 2007 pro forma non-GAAP revenue of $246 million, the pro forma non-GAAP gross margin of 26.8% and the pro forma non-GAAP operating loss of $74 million. The decrease in pro forma non-GAAP revenues and pro forma non-GAAP gross margins primarily reflects the expected volume decline in our PAS business.

The GAAP net loss for the fourth quarter of 2008 was $80.9 million, or a loss of $0.65 per share, as compared to a loss of $24.6 million, or $0.20 per share in the fourth quarter of 2007.

The fourth quarter GAAP gross profit of $30 million was impacted by the following significant items:

  • The Company recorded an increase of $18.5 million in inventory reserves primarily related to the Korea-based handset operations.
  • The Company's Broadband segment recorded an additional loss reserve of approximately $6.0 million related to its large infrastructure project in India.

The fourth quarter GAAP operating expenses of $109 million were impacted by the following significant items:

  • Recording a $13.1 million restructuring charge related to the actions announced on December 18, 2008 largely comprised of severance payment accruals.
  • Recording a $27.2 million non cash asset impairment relating to long-lived assets (primarily intangible assets, equipment and capitalized software).
  • Reduction of 2008 bonus accruals by $9.0 million.

Net cash, cash equivalents and short-term investments as of December 31, 2008 was $314 million compared to $180 million on December 31, 2007. The increase reflects the sale of PCD partially offset by usage of cash flow from operations.

Full Year 2008 Financial Results

Net sales for the year 2008 were $1.6 billion as compared to $2.5 billion for the year 2007. Gross margins for the year 2008 were 15.9% as compared to 13.0% in 2007. The operating loss for the full year 2008 and 2007 was $176 million and $212 million, respectively. The full year 2008 pro forma non-GAAP revenue, gross margins and operating loss were $634 million, 29.7% and $199 million, respectively. This compares to the full year 2007 pro forma non-GAAP revenue, gross margins and operating loss of $803 million, 27.4% and $251 million, respectively. The decrease in pro forma non-GAAP revenues primarily reflects the expected volume decline in our PAS business.

The GAAP net loss for the full year 2008 was $150.3 million, or a loss of $1.22 per share, as compared to a loss of $195.6 million, or $1.62 per share in the prior year.

'Our fourth quarter results reflect the significant changes we made during the year to both simplify the Company and to focus on our core business,' said
Peter Blackmore, UTStarcom's chief executive officer and president. 'Importantly we ended the year with net cash and short term investments of $314 million. During the fourth quarter we also announced aggressive actions to further reduce our operating expenses and streamline our business. We shall continue to drive further reductions in expenses during 2009 as we focus on growing revenues in our core IP based product portfolio.'

Going Concern

As a result of the Company's history of recurring losses and negative cash flows from operations, the Company expects its independent registered public accounting firm will issue a going concern uncertainty explanatory paragraph in its audit report on the financial statements for the year ended December 31, 2008.

However, management believes that if the Company is able to achieve its projected sales in 2009 and contain expenses and cash used in operations to the levels contemplated in the Company's 2009 financial plan, the Company will have sufficient liquidity to finance its anticipated working capital and capital expenditure requirements for the next twelve months.

Q1 2009 Guidance

During the conference call management will provide financial guidance for the first quarter of 2009. Due to the current economic climate the Company will not provide annual guidance.

Conference Call

The Company will host a conference call to discuss the results at 2:00 p.m. (PST) / 5:00 p.m. (EST) on February 26, 2009. The conference call dial-in numbers are as follows: United States 888-889-1058; International 706-634-2327. The conference ID number is 86513483.

A replay of the call will be available for 30 days. The conference call replay numbers are as follows: United States -- 800-642-1687; International -- 706-645-9291. The Access Code is 86513483.

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 PCD divestiture and planned wind down of its Korea-based handset manufacturing operations, 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-based handset operations 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.

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.

Forward-Looking Statements

This release includes forward-looking statements, including statements regarding the Company's strategy to reduce operating expenses, expected financial results in the first quarter of 2009, anticipated liquidity, capital expenditure requirements, the nature and contents of the audit report to be delivered by the Company's independent registered public accounting firm concerning the financial statements for the year ended December 31, 2008 and the expected investment in the Company's IP-based product portfolio. These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially. These risks include the ability of the Company to realize anticipated results of operational improvements, increase bookings and execute on its business plan as well as risk factors identified in its latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as filed with the Securities and Exchange Commission.


                                UTStarcom, Inc.
                     Condensed Consolidated Balance Sheets
                                (in thousands)
                                  (Unaudited)

                                                  December 31, December 31,
                                                       2008         2007
                       ASSETS
    Current assets:
      Cash, cash equivalents and short-term
       investments                                   $313,865     $503,078
      Accounts and notes receivable, net              169,496      343,525
      Inventories and deferred costs                  304,716      524,727
      Prepaids and other current assets               144,515      121,636
                                                      -------      -------
        Total current assets                          932,592    1,492,966
    Long-term assets:
      Property, plant and equipment, net              175,287      209,094
      Long-term deferred costs                        149,258      164,766
      Other long-term assets                           53,669      117,762
                                                       ------      -------
        Total assets                               $1,310,806   $1,984,588
                                                   ==========   ==========

     LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                               $176,384     $148,440
      Short-term debt                                       -      322,829
      Customer advances                               144,700      229,050
      Deferred revenue                                117,584      100,502
      Other current liabilities                       181,852      302,395
                                                      -------      -------
        Total current liabilities                     620,520    1,103,216
    Long-term liabilities:
      Long-term debt                                        -          333
      Long-term deferred revenue and other
       liabilities                                    222,644      259,358
                                                      -------      -------
        Total liabilities                             843,164    1,362,907

    Minority interest in consolidated subsidiaries        808        3,705
    Total stockholders' equity                        466,834      617,976
                                                      -------      -------
        Total liabilities, minority interest and
         stockholders' equity                      $1,310,806   $1,984,588
                                                   ==========   ==========



                                 UTStarcom, Inc.
                 Condensed Consolidated Statements of Operations
                    (in thousands, except per share amounts)
                                   (Unaudited)

                                 Three months ended        Years ended
                                     December 31,          December 31,
                                   --------------        ----------------
                                   2008      2007        2008        2007
                                   ----      ----        ----        ----
    Net sales                    $241,097  $806,330  $1,640,449  $2,466,970
    Cost of net sales             211,209   704,326   1,379,207   2,145,519
                                  -------   -------   ---------   ---------
    Gross profit                   29,888   102,004     261,242     321,451
                                   ------   -------     -------     -------

    Operating expenses (income):
      Selling, general and
       administrative              46,360    76,146     257,559     319,145
      Research and development     26,634    40,575     143,291     168,275
      Amortization of intangible
       assets                         278     3,824       4,111      15,961
      Impairment of goodwill and
       other long-lived assets     27,220    19,912      27,220      19,912
      Restructuring charges        13,059    14,474      13,059      14,474
      Net gain on divestitures     (4,327)        -      (7,782)     (4,271)
                                   ------         -      ------      ------
    Total operating expenses      109,224   154,931     437,458     533,496
                                  -------   -------     -------     -------

    Operating loss                (79,336)  (52,927)   (176,216)   (212,045)
                                  -------   -------    --------    --------

    Interest income (expense), net    776    (6,612)     (2,948)    (18,216)
    Other (expense) income         (2,680)   56,318      35,427      64,796
                                   ------    ------      ------      ------
    Loss before income taxes and
     minority interest            (81,240)   (3,221)   (143,737)   (165,465)
    Income taxes benefit (expense)    309   (22,164)     (7,087)    (32,898)

    Minority interest in (gain)
     losses of consolidated
     subsidiaries                     (18)      828         508       2,788
                                      ---       ---         ---       -----
    Net loss                     $(80,949) $(24,557)  $(150,316)  $(195,575)
                                 ========  ========   =========   =========


    Loss per share - Basic and
     Diluted                       $(0.65)   $(0.20)     $(1.22)     $(1.62)

    Weighted average shares used
     in per share calculation:
        - Basic and Diluted       124,843   121,340     123,490     121,059
                                  =======   =======     =======     =======



                                 UTStarcom, Inc.
                 Condensed Consolidated Statements of Cash Flows
                                  (in thousands)
                                   (Unaudited)

                                          Year ended          Year ended
                                       December 31, 2008   December 31, 2007
                                      ------------------  ------------------
    Net cash used in operating
     activities                            $(55,164)          $(225,093)
                                           --------           ---------

    Cash flows from investing activities:
      Property, plant and equipment, net    (14,214)            (27,324)
      Investments, net
      Proceeds from divestitures            214,051               4,271
      (Purchase of ) proceeds from
       disposition of an investment
       interest                              (8,655)              3,255
      Proceeds from repayment of loan
       by a variable interest entity          7,728                   -
      Change in restricted cash              (8,216)              6,591
      Short-term investments, net            54,991              41,950
      Other                                     361                 695
                                                ---                 ---
    Net cash provided by investing
     activities                             246,046              29,438
                                            -------              ------
    Cash flows from financing activities:
      Borrowings, net                      (325,317)            (61,605)
      Other                                  (7,295)              3,500
                                             ------               -----
    Net cash (used in) financing
     activities                            (332,612)            (58,105)
    Effect of exchange rate changes
     on cash and cash equivalents            13,884              29,586
                                             ------              ------
    Net decrease in cash and cash
     equivalents                           (127,846)           (224,174)
    Cash and cash equivalents at
     beginning of period                    437,449             661,623
                                            -------             -------
    Cash and cash equivalents at
     end of period                         $309,603            $437,449
                                           ========            ========



                                   UTSTARCOM, INC.
                          February 26, 2009 Conference 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   Qtr   Year
                ended ended  ended ended ended  ended ended ended ended ended
                  31-   30-   30-   31-    31-    31-   30-   30-  31-    31-
                 Mar-  Jun-  Sep-  Dec-   Dec-   Mar-  Jun-  Sep- Dec-   Dec-
                  07    07    07    07     07     08    08    08   08     08
                 ---   ---   ---   ---    ---    ---   ---   ---  ---    ---
    GAAP Revenue
     (a)        $476  $538  $647  $806  $2,467  $586  $633  $181  241  $1,641

    Less: PCD
     Segment
     Revenue (b) 288   358   458   560   1,664   431   449     -    -     880

    Less: Korea
     BU Sales
     to PCD (c)    -     -     -     -       -     -     -    35   92    $127

                 ---   ---   ---   ---     ---   ---   ---   ---  ---    ----
    Non-GAAP
     Revenue    $188  $180  $189  $246    $803  $155  $184  $146 $149    $634
                ====  ====  ====  ====    ====  ====  ====  ==== ====    ====

    -------------------------------
    (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.
                          February 26, 2009 Conference 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   Qtr   Year
                ended ended  ended ended ended  ended ended ended ended ended
                  31-   30-   30-   31-    31-    31-   30-   30-  31-    31-
                 Mar-  Jun-  Sep-  Dec-   Dec-   Mar-  Jun-  Sep- Dec-   Dec-
                  07    07    07    07     07     08    08    08   08     08
                 ---   ---   ---   ---    ---    ---   ---   ---  ---    ---
    GAAP Gross
     Profit (a)  $75   $80   $64  $102   $321    $92   $82   $57  $30   $261

      GAAP Gross
       Margin %  16%   15%   10%   13%    13%    16%   13%   31%  12%    16%

    Less: PCD
     Segment
     Gross
     Profit (b)   17    16    27   $34     94     33    36     -    -     69

    Less: Korea
     BU Gross
     Profit from
     Sales to
     PCD (c)       1     2     2     2      7      2     0     6   (4)     4
                 ---   ---   ---   ---    ---    ---   ---   ---  ---    ---
    Non-GAAP
     Gross
     Profit      $57   $62   $35   $66   $220    $57   $46   $51  $34   $188
                 ===   ===   ===   ===   ====    ===   ===   ===  ===   ====
      Non-GAAP
       Gross
       Margin %  30%   34%   19%   27%    27%    37%   25%   35%  23%    30%

    -------------------------------------------------
    (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.
                          February 26, 2009 Conference 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   Qtr   Year
                 ended ended  ended ended ended  ended ended ended ended ended
                   31-   30-   30-   31-    31-    31-   30-   30-  31-    31-
                  Mar-  Jun-  Sep-  Dec-   Dec-   Mar-  Jun-  Sep- Dec-   Dec-
                   07    07    07    07     07     08    08    08   08     08
                  ---   ---   ---   ---    ---    ---   ---   ---  ---    ---

    GAAP
     Operating
     Expense (a) $128  $135  $116  $154   $533   $123  $113   $92 $109   $437

    Less: PCD
     Operating
     Expense (b)    9     8     7     7     31      8     7     -    -    $15

    Less: Korea
     BU Operating
     Expense (c)    7     8     8     8     31      9    10    10    5    $34
                  ---   ---   ---   ---    ---    ---   ---   ---  ---    ---
    Non-GAAP
     Operating
     Expense     $112  $119  $101  $139   $471   $106   $96   $82 $104   $388
                 ====  ====  ====  ====   ====   ====   ===   === ====   ====

    ------------------------------------
    (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.
                          February 26, 2009 Conference 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   Qtr   Year
                ended ended  ended ended ended  ended ended ended  ended ended
                  31-   30-   30-   31-    31-    31-   30-   30-   31-    31-
                 Mar-  Jun-  Sep-  Dec-   Dec-   Mar-  Jun-  Sep-  Dec-   Dec-
                  07    07    07    07     07     08    08    08    08     08
                 ---   ---   ---   ---    ---    ---   ---   ---   ---    ---
    GAAP
     Operating
     Loss (a)   ($52) ($55) ($52) ($53) ($212)  ($31) ($31) ($35) ($79)  (176)

    Less: PCD
     Operating
     Profit (b)    8     8    20    27     63     25    28     -     -     53

    Less: Korea
     BU Operating
     Loss (c)     (6)   (6)   (6)   (6)   (24)    (7)  (10)   (4)   (9)   (30)
                 ---   ---   ---   ---    ---    ---   ---   ---   ---    ---
    Non-GAAP
     Operating
     Loss       ($54) ($57) ($66) ($74) ($251)  ($49) ($49)  (31)  (70)  (199)
                 ===   ===   ===   ===   ====    ===   ===   ===   ===    ===

    ---------------------------------
    (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.
                          February 26, 2009 Conference 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   Qtr   Year
                ended ended  ended ended ended  ended ended ended  ended ended
                  31-   30-   30-   31-    31-    31-   30-   30-   31-    31-
                 Mar-  Jun-  Sep-  Dec-   Dec-   Mar-  Jun-  Sep-  Dec-   Dec-
                  07    07    07    07     07     08    08    08    08     08
                 ---   ---   ---   ---    ---    ---   ---   ---   ---    ---
    Non-GAAP
     Revenue    $188  $180  $189  $246   $803   $155  $184  $146  $149   $634

    Non-GAAP
     Gross
     Profit       57    62    35    66    220     57    46    51    34   $188

      Non-GAAP
       Gross
       Margin %  30%   34%   19%   27%    27%    37%   25%   35%   23%    30%

    Non-GAAP
     Operating
     Expense     112   119   101   139    471    106    96    82   104   $388
                 ---   ---   ---   ---    ---    ---   ---   ---   ---   ----
    Non-GAAP
     Operating
     Loss       ($54) ($57) ($66) ($74) ($251)  ($49) ($49) ($31) ($70) ($199)
                 ===   ===   ===   ===   ====    ===   ===   ===   ===   ====

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



SOURCE UTStarcom, Inc.