UTStarcom Won't File on Time
UTStarcom
(UTSI) - Get Report
, struggling with a bookkeeping morass, won't file its 2004 financial report with the
SEC
on time. The failure puts the wireless networking outfit in technical default on a series of bonds.
Alameda, Calif.,-based UTStarcom expects to file the 2004 10-K and an amended 10-K for 2003 by April 15. The company is restating a number of line items to reflect revised accounting for related-party transactions, taxes, inventory and other matters. The 2004 annual report had been due Thursday.
The company estimated Thursday that its fourth-quarter loss was $30.2 million, or 26 cents a share, on sales of $746.6 million. That's narrower than the company's last fourth-quarter guidance, which dates to early January, when it predicted a loss of 40 cents to 45 cents a share on sales of $740 million to $745 million.
The filing delay puts UTStarcom in technical default on its 7/8% convertible subordinated notes due 2008. A "default event," however, has not yet occurred under the bonds' indenture, and the company expects to cure the technical infraction by filing the 2004 report in mid-April.
In its press release, UTStarcom reiterated that it has found a slew of material weaknesses in its financial controls as defined under the Sarbanes-Oxley law requiring stricter vetting of public companies' books. They relate to the number of trained accountants on its staff and its bookkeeping for inventory, goodwill, currency translation, among other things.
More control deficiencies might come to light, UTStarcom warned.
The stock was recently trading at $11.40 on Instinet, down 44 cents, or 3.7%.