Following an internal investigation into revenue recognition of a contract with a customer in India and a number of certain other transactions, UTStarcom announced plans to restate revenues and earnings for the fiscal years ended 2003 and 2004, and for each fiscal quarter within these fiscal years, and for the first three quarters of 2005.
The aggregate impact of the error corrections over the restatement periods have the effect of reducing previously reported revenue by approximately $49.6 million and net income by approximately $11.8 million. No changes in cash balances are expected as a result of the restatements. The Company expects that the revenue it has deferred as a result of these restatements will be recognized in periods subsequent to fiscal 2005.
UTStarcom said it prematurely recognized approximately $22 million in revenue on the India contract, with associated gross margins of less than one million dollars. The company’s management said certain information was withheld from management and the company’s auditors at the time revenue was originally recorded, which resulted in inappropriate revenue recognition during several of the quarters from 2003 through 2005. Additionally, as a result of this investigation, management has also identified a limited number of certain other transactions which also require adjustment. http://www.utstar.com
