EX-99.1 3 a04-1484_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

UTSTARCOM FOURTH QUARTER AND FULL-YEAR 2003
RESULTS: COMPANY ACHIEVES SIXTEENTH QUARTER OF RECORD REVENUES AND EARNINGS

 

100 Percent Year-Over-Year Revenue Growth, Record Backlog of $1.06 Billion, and Positive Cash Flow from Operations Highlight the Best Quarter in UTStarcom’s History

 

Company Raises GAAP EPS Guidance for First Quarter and Full-Year 2004

 

ALAMEDA, Calif., Jan. 22, 2004 – UTStarcom, Inc. (Nasdaq: UTSI), a global leader in IP access networking and services, today reported record revenues and earnings for its fourth quarter and full-year ended December 31, 2003.

 

The company will conduct a conference call today, Thursday, January 22, to discuss these results. The call will take place at 1:30 p.m. PST. (Please see Conference Call section below for dial-in numbers.)

 

“It is my privilege to report record performance for UTStarcom for the fourth quarter and full-year 2003,” said Hong Lu, chief executive officer of UTStarcom. “Our continued ability to deliver market-leading products to our customers and value to our shareholders is a testament to the strength of our technological innovation and dedication. UTStarcom continues to produce affordable, revenue-generating IP-based telecommunications and networking products for service providers around the world. Although our core business remains in China, UTStarcom serves customers in developing markets in Asia, Latin America and Africa, in addition to more established customers in North America and Europe.”

 

Net sales for the fourth quarter of 2003 were $643.6 million, an increase of 114 percent over net sales of $301.1 million reported in the fourth quarter of 2002. Full-year net sales increased to $1.96 billion, an increase of 100 percent over net sales of $981.8 million reported in 2002.

 

Net income for the fourth quarter of 2003 was $66.4 million, or $0.52 per share, compared to net income of $33.9 million, or $0.30 per share, for the fourth quarter of 2002, an increase in net income of 96 percent year-over-year. Net income for the full-year 2003 was $202.3 million, or $1.64 per share, as compared to $107.9 million, or $0.94 per share, in 2002, representing an increase in net income of 87 percent year-over-year.

 

 

Operating cash flow from operations was positive $47.4 million for the fourth quarter and positive $50.0 million for the full-year 2003.

 

Backlog at the end of 2003 was $1.06 billion, an increase of 75 percent over the $605.4 million backlog reported at the end of 2002.

 

“The record year-end backlog of over $1 billion, combined with the announcement last week of a $200 million dollar contract with China Telecom which is incremental to that backlog, gives us a tremendous amount of visibility in 2004,” said Mike Sophie, senior vice president and chief financial officer of UTStarcom, Inc. “In addition, handsets only represent approximately 11 percent of backlog, but are typically between 40 to 50 percent of revenues due to the book-and-ship nature of handset sales.  Therefore we expect significant additional handset bookings and revenues throughout 2004 which increases our confidence in guidance. Finally, the cash that we raised in our recent equity offering puts us in a strong position to aggressively pursue strategic initiatives to increase shareholder value throughout 2004.”

 

2004 Guidance:

Q1 Revenues:

•                  Revenues for the first quarter are anticipated to be approximately $570-$580 million. With 7-8% anticipated sequential increase targeted each quarter for the balance of the year.

 

Q1 GAAP EPS:

•                  GAAP earnings per share for the first quarter is targeted at $0.38, inclusive of $0.03 dilution associated with the equity offering.

 

FY 2004 Revenues:

•                  Full-Year 2004 revenues are anticipated to be in the range of $2.5 to $2.55 Billion.

 

 

FY 2004 GAAP EPS

•                  GAAP earnings per share for the full-year 2004 is expected to be in the range of $1.90-$1.94, up from previous guidance given of $1.87-$1.92 on January 9, 2004.

 

Q4 2003 Highlights

Stellar Financial Performance

•                  Logged 16th quarter of record revenues and profitability since March 2000 IPO

•                  Fourth quarter 2003 revenues of $643.6 million, 114% year-over-year growth

•                  Full-Year 2003 revenues of $1.96 billion, 100% year-over-year growth

•                  Fourth quarter 2003 GAAP EPS $0.52, 73% year-over-year growth

•                  Full-Year 2003 GAAP EPS of $1.64, 74% year-over-year growth

•                  Generated $47.4 million positive cash-flow from operations for the quarter and $50.0 million positive cash-flow from operations for the year

•                  Record Year-End backlog of $1.06 Billion

 

Global Leadership

•                  In China, the number of subscribers on UTStarcom’s PAS networks reached 21 million at the end of Q4, while total PAS subscribers in the China market is approximately 35 million

•                  Subscriber base for Yahoo! BB in Japan continues to grow, with more than 3.8 million subscribers for broadband service and approximately 3.3 million for the BB Phone service.

•                  UTStarcom maintains the largest all-IP network in the world.

 

Strategic International Expansion

•                  Signed $40 million expansion contract with Yahoo! BB for additional IP-DSLAM deployments

•                  Expanded contract with FITEL to offer PAS services in southern Taiwan

•                  Announced contract with Multifon to offer PAS service in Honduras

•                  Announced plans for strategic development in North and South America

 

Recent Accolades

•                  Ranked #1 “Fastest Growing Technology Companies of 2003” in Business 2.0

 

 

•                  Selected as World Economic Forum Technology Pioneer for 2004

 

Conference Call

The company will conduct a conference call, which is open to the public, to discuss these results. The call will take place at 1:30 p.m. (PST) today, January 22. The conference call dial-in numbers are as follows:  United States – 888-398-3046; International – 706-634-2492.

 

A replay of the call will be available from approximately 5:30 p.m. (PST) on January 22, 2004 to 11:59 p.m. (PST) on January 29, 2004. The conference call replay numbers are as follows: United States — 800-642-1687; International — 706-645-9291. The Access Code is 4810391.

 

Investors will also have the opportunity to listen to the conference call and the replay over the Internet through UTStarcom’s Web site at: http://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.

 

About UTStarcom, Inc.

UTStarcom is a global leader in IP access networking solutions and international service and support. The company sells its wireline, wireless, optical and switching solutions to operators in both fast growth 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 design operations in New Jersey, China, and India.

 

For more information about UTStarcom, visit the company’s Web site at www.utstar.com.

 

 

Forward-Looking Statements

This release includes forward-looking statements, including the foregoing statements regarding continued strength of the Company’s business in China and in international markets as well as across product lines, the Company’s ability to replicate its success in China in international markets, anticipated revenue attributable to particular product lines, and, the guidance given for anticipated revenue and earnings per share for the first quarter and full-year of 2004.  These statements are forward-looking in nature and subject to risks and uncertainties that may cause actual results to differ materially. These risk factors include rapidly changing technology, the changing nature of global telecommunications markets, particularly in China, the termination of significant contracts, the direction and results of future research and development efforts, evolving product and applications standards, reduction or delays in system deployments, product transitions, potential non-realization of backlog, changes in demand for and acceptance of the Company’s products, general adverse economic conditions, and trends and uncertainties such as changes in government regulation and licensing requirements, particularly in China. The Company also refers readers to the 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.

 

Company Contacts

Michael J. Sophie

Sr. Vice President of Finance and CFO

510-749-1510

 

Chesha E. Kamieniecki

Investor Relations Manager

510-749-1560

 

Press Contact

Stephanie Gallagher

Engage PR

510-748-8200, ext. 213

stephanie@engagepr.com

 

###

 

 

UTStarcom, Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,
2003

 

December 31,
2002*

 

December 31,
2003

 

December 31,
2002*

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

643,596

 

$

301,095

 

$

1,964,332

 

$

981,806

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

443,719

 

199,994

 

1,328,164

 

636,334

 

Gross profit

 

199,877

 

101,101

 

636,168

 

345,472

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

57,211

 

28,475

 

187,128

 

110,263

 

Research and development

 

47,639

 

22,657

 

155,252

 

86,182

 

In process research and development

 

(123

)

—

 

10,686

 

670

 

Amortization of intangible assets

 

3,111

 

631

 

8,370

 

2,395

 

Total operating expenses

 

107,838

 

51,763

 

361,436

 

199,510

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

92,039

 

49,338

 

274,732

 

145,962

 

 

 

 

 

 

 

 

 

 

 

Interest and other income (expenses)

 

(2,530

)

(3,912

)

297

 

(5,637

)

Equity in loss of affiliated companies

 

(980

)

(3,109

)

(5,260

)

(4,053

)

Income before income taxes and minority interest

 

88,529

 

42,317

 

269,769

 

136,272

 

Income tax expense

 

22,132

 

8,464

 

67,442

 

27,254

 

Minority interest in earnings of consolidated subsidiaries

 

(41

)

—

 

(76

)

(1,156

)

 

 

 

 

 

 

 

 

 

 

Net income

 

$

66,356

 

$

33,853

 

$

202,251

 

$

107,862

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.64

 

$

0.32

 

$

1.95

 

$

0.98

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.52

 

$

0.30

 

$

1.64

 

$

0.94

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares used in per-share calculation:

 

 

 

 

 

 

 

 

 

- Basic

 

103,814

 

106,621

 

103,659

 

109,566

 

- Diluted

 

129,672

 

111,233

 

124,909

 

114,407

 

 

 

 

Three months ended

 

Twelve months ended

 

 

 

December 31,
2003

 

December 31,
2002*

 

December 31,
2003

 

December 31,
2002*

 

 

 

 

 

 

 

 

 

 

 

1. The above unaudited financial statements include the following non-cash expenses:

 

 

 

 

 

 

 

 

 

Cost of Sales

 

$

1

 

$

1

 

$

6

 

$

19

 

Selling, general and administrative

 

9

 

61

 

238

 

1,237

 

Research and development

 

1,056

 

453

 

4,058

 

1,843

 

Total stock compensation expense

 

$

1,066

 

$

515

 

$

4,302

 

$

3,099

 

 

 

 

 

 

 

 

 

 

 

Amortization of intangible assets

 

$

3,111

 

$

631

 

$

8,370

 

$

2,395

 

 

 

 

 

 

 

 

 

 

 

In-process research and development

 

$

(123

)

$

—

 

$

10,686

 

$

670

 

 

 

 

 

 

 

 

 

 

 

Impairment in investment portfolio

 

$

(348

)

$

4,406

 

$

(349

)

$

7,230

 

 

 

 

 

 

 

 

 

 

 

2. Earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

 

 

 

 

 

 

 

Income available to common stockholders

 

$

66,356

 

$

33,853

 

$

202,251

 

$

107,862

 

 

 

 

 

 

 

 

 

 

 

Effect of Dilutive Securities

 

 

 

 

 

 

 

 

 

7/8% Convertible Subordinated Notes

 

617

 

—

 

3,090

 

—

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

 

 

 

 

 

 

Income available to common stockholders + assumed conversions

 

$

66,973

 

$

33,853

 

$

205,341

 

$

107,862

 

 

* Certain reclassifications have been made to prior year balances in order to conform to the current year presentation

 

 

UTStarcom, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

December 31,
2003

 

December 31,
2002*

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash, cash equivalents and short-term investment

 

$

422,591

 

$

339,249

 

Accounts receivable, net

 

368,865

 

222,050

 

Notes receivable

 

11,362

 

12,048

 

Inventories, net

 

298,467

 

183,687

 

Deferred costs/Inventories at customer sites under contracts

 

517,548

 

240,979

 

Prepaid expenses

 

136,262

 

47,220

 

Restricted cash

 

24,404

 

21,251

 

Other current assets

 

52,408

 

40,888

 

Total current assets

 

1,831,907

 

1,107,372

 

Property, plant and equipment, net

 

186,076

 

93,980

 

Long-term investments

 

24,066

 

35,360

 

Goodwill and intangible assets, net

 

145,933

 

49,820

 

Other long term assets

 

38,976

 

19,020

 

Total assets

 

$

2,226,958

 

$

1,305,552

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

251,176

 

$

256,980

 

Debt

 

1

 

—

 

Income taxes payable

 

16,780

 

13,003

 

Deferred revenue

 

503,612

 

164,247

 

Other

 

173,138

 

104,927

 

Total current liabilities

 

944,707

 

539,157

 

 

 

 

 

 

 

Long-term debt

 

402,500

 

—

 

Minority interest in consolidated subsidiaries

 

560

 

—

 

Stockholders’ equity:

 

 

 

 

 

Common stock

 

131

 

135

 

Additional paid-in capital

 

653,624

 

658,546

 

Deferred stock compensation

 

(7,761

)

(11,766

)

Retained earnings

 

229,777

 

120,520

 

Receivable from shareholders

 

—

 

(282

)

Other comprehensive income/(loss)

 

3,420

 

(758

)

Total stockholders’ equity

 

879,191

 

766,395

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

2,226,958

 

$

1,305,552

 

 

 

 

 

 

 

 

 

 

 

December 31,
2003

 

December 31,
2002*

 

 

 

(unaudited)

 

 

 

 

Inventories are made up of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

Inventories at factories

 

$

207,504

 

$

143,684

 

 

Inventories at customer sites

 

90,963

 

40,003

 

 

Inventories at customer sites under contracts

 

517,548

 

240,979

 

 

 

 

 

 

 

 

 

Total inventories

 

$

816,015

 

$

424,666

 

 

* Certain reclassifications have been made to prior year balances in order to conform to the current year presentation