UTStarcom Announces Delay in Filing 2006 Annual Report

UTStarcom Announces Delay in Filing 2006 Annual Report

FirstCall via COMTEX News Network/ — UTStarcom, Inc. (Nasdaq: UTSI), a global leader in IP-based, end-to-end networking solutions and services, today announced an expected delay in filing its Annual Report on Form 10-K for the year ended December 31, 2006 (the “2006 10-K”). Because of time needed to analyze and compute the financial statement effects of the errors in measurement dates identified in the Governance Committee’s on-going review of the Company’s equity grant award practices, to prepare restated financial statements, and for audit by the Company’s independent registered public accounting firm, the Company did not file its 2006 10-K by the scheduled due date of March 1, 2007.

As previously communicated on February 1, 2007, the Governance Committee review found that in certain instances all actions that establish a measurement date under the requirements of Accounting Principles Board No. 25, Accounting for Stock Issued to Employees, had not occurred at the grant date, which had been used as the measurement date in accounting for Company stock option grants. A later date, when all such actions had taken place, should have been used as the measurement date for these stock options. The Audit Committee of the Company’s Board of Directors then determined, in consultation with and on the recommendation of the Company’s management, the effect of using incorrect measurement dates would require the Company to record material additional stock-based compensation charges in its previously issued financial statements. The Company therefore previously announced, based on preliminary information, its previously issued financial statements for the years 2000 through 2006, including interim periods within these fiscal years, should no longer be relied upon, and its estimate that the restatement may involve additional non-cash compensation and related charges of approximately $50 million.

The Company has filed a notification of late filing (Form 12b-25) with the Securities and Exchange Commission, which reports (i) the Company will be unable to file its 2006 10-K by the required filing date and (ii) the Company does not currently anticipate the 2006 10-K will be filed on or before the fifteenth calendar day following the prescribed due date according to Rule 12b-25. The Company will file its restated financial statements as soon as practicable, but as is customary when required filings with the SEC are not timely made, it expects to receive a notice from Nasdaq concerning the possible delisting of its common stock.

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