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UTStarcom Releases Financial Results for the Fourth Quarter and Full Year 2009

Mar. 11, 2010 (PR Newswire) --

ALAMEDA, Calif., March 11 /PRNewswire-FirstCall/ -- UTStarcom, Inc. (Nasdaq: UTSI), today reported financial results for the fourth quarter of 2009 and for the full year ended December 31, 2009.

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

"I am pleased we managed to deliver sequential revenue growth in the fourth quarter, particularly as we have repositioned the Company to focus on our core IP-based technology. Our fourth quarter results also reflect continued progress towards executing our restructuring aimed at returning the Company to profitability," said Peter Blackmore, UTStarcom's chief executive officer and president.

Fourth Quarter 2009 Financial Results

Net sales for the fourth quarter 2009 were $116 million as compared to $241 million in the fourth quarter of 2008. Gross margins for the fourth quarter 2009 were 30% as compared to 12% in the fourth quarter of 2008. The operating loss for the fourth quarter of 2009 and 2008 was $41 million and $79 million, respectively.

The GAAP net loss attributable to UTStarcom for the fourth quarter of 2009 was $39 million, or a loss of $0.31 per share, as compared to a loss of $81 million, or $0.65 per share in the fourth quarter of 2008.

The fourth quarter GAAP operating expenses of $76 million was negatively impacted by a $33 million non-cash asset impairment charge related to the Company's Hangzhou facility. As previously disclosed, the company entered into a sale and lease-back agreement related to the Hangzhou facility on December 21, 2009.

Full Year 2009 Financial Results

Net sales for the year 2009 were $386 million as compared to $1.6 billion for the year 2008. Gross profit for the year 2009 was $65 million as compared to $261 million for the year 2008. Gross margins for the year 2009 were 17% as compared to 16% in 2008. The operating loss for the full year 2009 and 2008 was $219 million and $176 million, respectively.

The GAAP net loss attributable to UTStarcom for the full year 2009 was $226 million, or a loss of $1.77 per share, as compared to a loss of $150 million, or $1.22 per share in the prior year.

Net cash, cash equivalents and short-term investments as of December 31, 2009 was $267 million compared to $314 million on December 31, 2008. The cash balance of $267 million includes $7 million deposit related to the sale of the Company's Hangzhou facility, and the remaining net proceeds are expected to be received upon closing of the transaction.

Non-GAAP Results

To enable a comparison of the financial results for the Company on a year-over-year basis the Company has prepared certain 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 fourth quarter 2009 non-GAAP revenue was $104 million, the non-GAAP gross margin was 32% and the non-GAAP operating loss was $43 million. This compares to the fourth quarter 2008 non-GAAP revenue of $149 million, the non-GAAP gross margin of 23% and the non-GAAP operating loss of $70 million. The decrease in non-GAAP revenues is primarily due to the expected decline in the PAS businesses and the divestiture or wind-down of our non-core businesses.

The full year 2009 non-GAAP revenue, gross margins and operating loss were $330 million, 26% and $192 million, respectively. This compares to the full year 2008 non-GAAP revenue, gross margins and operating loss of $634 million, 30% and $199 million, respectively. The decrease in non-GAAP revenues reflects the expected low demand for the PAS infrastructure products, the exit from certain low margin Broadband products, and lower handset sales due to the continued wind-down of the Company's China handset business.

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 March 11, 2010 and 6:00 a.m. China time on March 12, 2010.

The conference call dial-in numbers are as follows: United States 877-405-3429; International 702-928-6906. The conference ID number is 5738-4442.

A replay of the call will be available for 7 days. The conference call replay numbers are as follows: United States -- 800-642-1687; International -- 706-645-9291. The Access Code is 5738-4442.

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 Non-GAAP Financial Measures

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. To enable a comparison of the financial results for the Company on a year-over-year and a quarter-over-quarter basis the Company has prepared certain 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 non-GAAP financial measures is provided at the end of this press release and on the Company's website.

In addition, these non-GAAP measures are among the information management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with 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, 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, achieve profitability, investment in selective products and certain geographic regions and transition to a new business model. 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, successfully transition to a new management team and headquarters location 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. The Company is in a period of significant transition and in the conduct of its business is exposed to additional risks as a result. All forward-looking statements included in this release are based upon information available to the Company as of the date of this release, which may change, and we assume no obligation to update any such forward-looking statement.


                              UTStarcom, Inc.                         
                  Condensed Consolidated Balance Sheets              
                              (in thousands)                         
                               (Unaudited)                           
                                                                     
                                                    December 31, December 31,
                                                       2009         2008
                                                       ----         ----
                     ASSETS                                          
    Current assets:                                                  
      Cash, cash equivalents and short-term
       investments                                   $266,881     $313,865
      Accounts and notes receivable, net               43,773      169,496
      Inventories and deferred costs                  202,753      304,716
      Prepaids and other current assets                74,354      144,515
                                                       ------      -------
        Total current assets                          587,761      932,592
    Long-term assets:                                                
      Property, plant and equipment, net              130,612      175,287
      Long-term deferred costs                        184,978      149,258
      Other long-term assets                           25,760       53,669
                                                       ------       ------
        Total assets                                 $929,111   $1,310,806
                                                     ========   ==========
                                                                     
             LIABILITIES AND EQUITY                                  
    Current liabilities:                                             
      Accounts payable                                $54,115     $176,384
      Customer advances                               120,364      144,700
      Deferred revenue                                170,777      117,584
      Other current liabilities                       147,914      181,852
                                                      -------      -------
        Total current liabilities                     493,170      620,520
    Long-term liabilities:                                           
      Long-term deferred revenue and other                           
       liabilities                                    179,790      222,644
                                                      -------      -------
        Total liabilities                             672,960      843,164

    Total equity                                      256,151      467,642
                                                      -------      -------
        Total liabilities and equity                 $929,111   $1,310,806
                                                     ========   ==========




                                   UTStarcom, Inc.                            
                   Condensed Consolidated Statements of Operations            
                      (in thousands, except per share amounts)                
                                    (Unaudited)                               
                                                                              
                                     Three months ended       Years ended    
                                        December 31,          December 31,   
                                       2009      2008       2009        2008 
                                       ----      ----       ----        ---- 
                                                                              
    Net sales                       $116,337  $241,097   $386,344  $1,640,449 
    Cost of net sales                 81,361   211,209    321,365   1,379,207 
                                      ------   -------    -------   --------- 
    Gross profit                      34,976    29,888     64,979     261,242 
                                      ------    ------     ------     ------- 
                                                                              
    Operating expenses:                                                       
      Selling, general and                                                    
       administrative                 26,452    46,360    140,742     257,559 
      Research and development        11,260    26,634     63,243     143,291 
      Amortization of intangible
       assets                              -       278          -       4,111 
      Impairment of goodwill and                                              
       other long-lived assets        33,287    27,220     33,287      27,220 
      Restructuring charges            5,010    13,059     46,495      13,059 
      Gain on divestiture               (432)   (4,327)      (100)     (7,782)
                                        ----    ------       ----      ------ 
    Total operating expenses          75,577   109,224    283,667     437,458 
                                      ------   -------    -------     ------- 
                                                                              
    Operating loss                   (40,601)  (79,336)  (218,688)   (176,216)
                                     -------   -------   --------    -------- 
                                                                              
    Interest income (expense), net       275       776      1,541      (2,948)
    Other income (expense)             5,644    (2,680)     2,303      35,427 
                                       -----    ------      -----      ------ 
    Loss before income taxes         (34,682)  (81,240)  (214,844)   (143,737)
    Income taxes benefit (expense)    (4,694)      309    (10,860)     (7,087)
                                      ------       ---    -------      ------ 
    Net loss                         (39,376)  (80,931)  (225,704)   (150,824)
                                                                              
    Net income (loss) attributable
     to noncontrolling interest          (16)      (18)        16         508 
                                         ---       ---        ---         --- 
    Net loss attributable to                                                  
     UTStarcom, Inc.                $(39,392) $(80,949) $(225,688)  $(150,316)
                                    ========  ========  =========   ========= 
                                                                              
                                                                              
    Net loss per share attributable
     to UTStarcom, Inc. -Basic                                                
     and Diluted                      $(0.31)   $(0.65)    $(1.77)     $(1.22)
                                                                              
    Weighted average shares used in                                           
     per share calculation:                                                   
    Basic and Diluted                128,581   124,843    127,346     123,490 
                                     =======   =======    =======     ======= 




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

                                                    Years ended December 31,
                                                        2009       2008 
                                                        ----       ---- 
                                                         (In thousands)   
                                                                        
    Net cash used in operating activities             $(67,448)  $(55,164)
                                                      --------   -------- 
                                                                        
    Cash flows from investing activities:                               
      Property, plant and equipment, net                (2,012)   (14,214)
      Deposit received on pending sale of building       7,307          - 
      Net proceeds from divestitures                    11,508    214,051 
      Proceeds from disposition of an
       investment interest                               2,639     33,429 
      Proceeds from repayment of loan by a variable                     
       interest entity                                       -      7,728 
      Change in restricted cash                         (1,973)    (8,216)
      Short-term investments, net                        3,214     12,907 
      Other                                                635        361 
                                                           ---        --- 
    Net cash provided by investing activities           21,318    246,046 
                                                        ------    ------- 
    Cash flows from financing activities:                               
      Borrowings, net                                        -   (325,317)
      Other                                               (388)    (7,295)
                                                          ----     ------ 
    Net cash used in financing activities                 (388)  (332,612)
    Effect of exchange rate changes on cash and cash                    
     equivalents                                         2,758     13,884 
                                                         -----     ------ 
    Net decrease in cash and cash equivalents          (43,760)  (127,846)
    Cash and cash equivalents at beginning of period   309,603    437,449 
                                                       -------    ------- 
    Cash and cash equivalents at end of period        $265,843   $309,603 
                                                      ========   ======== 




                                UTSTARCOM, INC.                            
                         March 11, 2010 Conference Call                    
                                                                           
                                                                           
               RECONCILIATION OF GAAP REVENUE TO NON-GAAP REVENUE     
                                ($ in millions)                            
                                  (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 both PCD had been divested and
    the Korea handsets business 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 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 Qtr ended  Qtr ended Qtr ended Year ended
                        31-Mar-08 30-Jun-08  30-Sep-08 31-Dec-08  31-Dec-08
                        --------- ---------  --------- ---------  ---------
    GAAP Revenue (a)         $586      $633       $181      $241     $1,641
                                                                           
    Less: PCD Segment                                                      
     Revenue (b)              431       449          -         -        880
                                                                           
    Less: Korea Handset                                                    
     Sales to PCD (c)           -         -         35        92        127

                             ----      ----       ----      ----       ----
    Non-GAAP Revenue         $155      $184       $146      $149       $634
                             ====      ====       ====      ====       ====
                                                                           
                        Qtr ended Qtr ended  Qtr ended Qtr ended Year ended
                        31-Mar-09 30-Jun-09  30-Sep-09 31-Dec-09  31-Dec-09
                        --------- ---------  --------- ---------  ---------
    GAAP Revenue (a)         $119       $80        $71      $116       $386
                                                                           
    Less: PCD Segment                                                      
     Revenue (b)                -         -          -         -          -
                                                                           
    Less: Korea Handset                                                    
     Sales to PCD (c)          39        (3)         8        12         56

                              ---       ---        ---      ----       ----
    Non-GAAP Revenue          $80       $83        $63      $104       $330
                              ===       ===        ===      ====       ====
                                                                           
                                                                           
    (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 quarters ended December 31, 2008 and 2009,
    which is derived from the revenue reported in the Form 10-Qs and Form 10-K
    with respect to fiscal years 2008 and 2009.                               
                                                                           
    (b) Effective July 1, 2008 the PCD segment was divested by the Company.
                                                                           
    (c) Prior to the July 1, 2008 divestiture of PCD, Korea handset 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.                             
                          March 11, 2010 Conference Call                      
                                                                              
                                                                              
           RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT  
                                  ($ in millions)                             
                                    (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 both PCD had been divested and the Korea
    handsets business 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 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  Qtr ended   Qtr ended  Qtr ended  Year ended 
                      31-Mar-08  30-Jun-08   30-Sep-08  31-Dec-08   31-Dec-08 
                      ---------  ---------   ---------  ---------   --------- 
    GAAP Gross 
     Profit (a)             $92        $82         $57        $30        $261 
       GAAP Gross                                                             
        Margin %             16%        13%         31%        12%         16%
                                                                              
    Less: PCD Segment                                                         
     Gross Profit (b)        33         36           -          -          69 
                                                                              
    Less: Korea                                                               
     Handset Gross                                                            
     Profit from                                                              
     Sales to PCD (c)         2          0           6         (4)          4 
                                                                              
                            ---        ---         ---        ---        ---- 
    Non-GAAP Gross                                                            
     Profit                 $57        $46         $51        $34        $188 
                            ===        ===         ===        ===        ==== 
       Non-GAAP Gross                                                         
        Margin %             37%        25%         35%        23%         30%
                                                                              
                      Qtr ended  Qtr ended   Qtr ended  Qtr ended  Year ended 
                      31-Mar-09  30-Jun-09   30-Sep-09  31-Dec-09   31-Dec-09 
                      ---------  ---------   ---------  ---------   --------- 
    GAAP Gross
     Profit (a)             $22       ($16)        $24        $35         $65 
       GAAP Gross                                                             
        Margin %             18%       (20%)        34%        30%         17%
                                                                              
    Less: PCD Segment                                                         
     Gross Profit (b)         -          -           -          -           - 
                                                                              
    Less: Korea                                                               
     Handset Gross                                                            
     Profit from                                                              
     Sales to PCD (c)         3        (28)          2          2         (21)
                                                                              
                            ---        ---         ---        ---         --- 
    Non-GAAP Gross                                                            
     Profit                 $19        $12         $22        $33         $86 
                            ===        ===         ===        ===         === 
       Non-GAAP Gross                                                         
        Margin %             24%        14%         35%        32%         26%
                                                                              
                                                                              
                                                                              
                                                                              
    (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 quarters ended December 31, 2008 
    and 2009, which is derived from the gross profit and gross margin % 
    reported in the Form 10-Qs and Form 10-K with respect to fiscal years 2008
    and 2009.      
                                                                              
    (b) Effective July 1, 2008 the PCD segment was divested by the Company.   
                                                                              
    (c) Prior to the July 1, 2008 divestiture of PCD, Korea handset 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.                             
                          March 11, 2010 Conference Call                     
                                                                             
                                                                             
        RECONCILIATION OF GAAP OPERATING EXPENSE TO NON-GAAP OPERATING 
                                     EXPENSE                                
                                 ($ in millions)                             
                                   (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 both PCD had been divested and the Korea
    handsets business 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 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 Qtr ended Qtr ended Qtr ended Year ended
                           31-Mar-08 30-Jun-08 30-Sep-08 31-Dec-08  31-Dec-08
                           --------- --------- --------- ---------  ---------
    GAAP Operating                                                           
     Expense (a)                $123      $113       $92      $109       $437
                                                                             
    Less: PCD Operating                                                      
     Expense (b)                   8         7         -         -         15
                                                                             
    Less: Korea Handset                                                      
     Operating Expense (c)         9        10        10         5         34
                                                                             
                                ----       ---       ---      ----       ----
    Non-GAAP Operating                                                       
     Expense                    $106       $96       $82      $104       $388
                                ====       ===       ===      ====       ====
                                                                             
                           Qtr ended Qtr ended Qtr ended Qtr ended Year ended
                           31-Mar-09 30-Jun-09 30-Sep-09 31-Dec-09  31-Dec-09
                           --------- --------- --------- ---------  ---------
    GAAP Operating                                                           
     Expense (a)                 $81       $70       $58       $76       $285
                                                                             
    Less: PCD Operating                                                      
     Expense (b)                   -         -         -         -          -
                                                                             
    Less: Korea Handset                                                      
     Operating Expense (c)         3         2         1         -          6
                                                                             
                                 ---       ---       ---       ---       ----
    Non-GAAP Operating                                                       
     Expense                     $78       $68       $57       $76       $279
                                 ===       ===       ===       ===       ====
                                                                             
                                                                             
                                                                             
    (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 quarters 
    ended December 31, 2008 and 2009, which is derived from the operating 
    expenses reported in the Form 10-Qs and Form 10-K with respect to the 
    fiscal years 2008 and 2009. 
                                                                             
    (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 handset has been recorded in 
    the Handset segment.                                                    




                                  UTSTARCOM, INC.                             
                          March 11, 2010 Conference Call                      
                                                                              
                                                                              
           RECONCILIATION OF GAAP OPERATING LOSS TO NON-GAAP OPERATING LOSS
                                  ($ in millions)                             
                                    (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 both PCD had been divested and the Korea
    handsets business 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 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  Qtr ended  Qtr ended  Qtr ended  Year ended 
                       31-Mar-08  30-Jun-08  30-Sep-08  31-Dec-08   31-Dec-08 
                       ---------  ---------  ---------  ---------   --------- 
    GAAP Operating                                                            
     Loss (a)               ($31)      ($31)      ($35)      ($79)      ($176)
                                                                              
    Less:  PCD                                                                
     Operating
     Profit (b)               25         28          -          -          53 
                                                                              
    Less: Korea                                                               
     Handset Operating                                                        
     Income (Loss) (c)        (7)       (10)        (4)        (9)        (30)
                                                                              
                            ----       ----       ----       ----       ----- 
    Non-GAAP                                                                  
     Operating Loss         ($49)      ($49)      ($31)      ($70)      ($199)
                            ====       ====       ====       ====       ===== 
                                                                              
                       Qtr ended  Qtr ended  Qtr ended  Qtr ended  Year ended 
                       31-Mar-09  30-Jun-09  30-Sep-09  31-Dec-09   31-Dec-09 
                       ---------  ---------  ---------  ---------   --------- 
    GAAP Operating                                                            
     Loss (a)               ($59)      ($85)      ($34)      ($41)      ($219)
                                                                              
    Less:  PCD                                                                
     Operating 
     Profit (b)                -          -          -          -           - 
                                                                              
    Less: Korea                                                               
     Handset Operating                                                        
     Income (Loss) (c)         -        (30)         1          2         (27)
                                                                              
                            ----       ----       ----       ----       ----- 
    Non-GAAP                                                                  
     Operating Loss         ($59)      ($55)      ($35)      ($43)      ($192)
                            ====       ====       ====       ====       ===== 
                                                                              
                                                                              
                                                                              
    (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 quarters ended 
    December 31, 2008 and 2009, which is derived from the operating loss 
    reported in the Form 10-Qs and Form 10-K with respect to fiscal years 2008
    and 2009.                               
                                                                              
    (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 handset has been recorded in the Handset
    segment.                                                                 




                                  UTSTARCOM, INC.                             
                          March 11, 2010 Conference Call                      
                                                                              
                                                                              
                       ABBREVIATED NON-GAAP P&L STATEMENT (a)             
                                  ($ in millions)                             
                                    (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 both PCD had been divested and the Korea
    handsets business 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 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  Qtr ended  Qtr ended  Qtr ended  Year ended 
                       31-Mar-08  30-Jun-08  30-Sep-08  31-Dec-08   31-Dec-08 
                       ---------  ---------  ---------  ---------   --------- 
    Non-GAAP Revenue        $155       $184       $146       $149        $634 
                                                                              
    Non-GAAP Gross                                                            
     Profit                   57         46         51         34         188 
       Non-GAAP Gross                                                         
        Margin %              37%        25%        35%        23%         30%
                                                                              
    Non-GAAP Operating                                                        
     Expense                 106         96         82        104         388 
                                                                              
                            ----       ----       ----       ----       ----- 
    Non-GAAP                                                                  
     Operating Loss         ($49)      ($49)      ($31)      ($70)      ($199)
                            ====       ====       ====       ====       ===== 
                                                                              
                       Qtr ended  Qtr ended  Qtr ended  Qtr ended  Year ended 
                       31-Mar-09  30-Jun-09  30-Sep-09  31-Dec-09   31-Dec-09 
                       ---------  ---------  ---------  ---------   --------- 
    Non-GAAP Revenue         $80        $83        $63       $104        $330 
                                                                              
    Non-GAAP Gross                                                            
     Profit                   19         12         22         33          86 
       Non-GAAP Gross                                                         
        Margin %              24%        14%        35%        32%         26%
                                                                              
    Non-GAAP Operating                                                        
     Expense                  78         68         57         76         279 
                                                                              
                            ----       ----       ----       ----       ----- 
    Non-GAAP                                                                  
     Operating Loss         ($59)      ($55)      ($35)      ($43)      ($192)
                            ====       ====       ====       ====       ===== 
                                                                              
                                                                              
    (a) Please refer to the preceding reconciliation tables for the           
     adjustments to GAAP Revenue, Gross Profit, Operating Expense and         
     Operating Loss.                                                          



SOURCE UTStarcom, Inc.