VANCOUVER, British Columbia, Oct. 31 /PRNewswire-FirstCall/ -- Nam
Tai Electronics, Inc. ("Nam Tai" or the "Company") (NYSE Symbol:
NTE) today announced its unaudited results for the third quarter
ended September 30, 2006. KEY HIGHLIGHTS (In thousands of US
Dollars, except per share data, percentages and as otherwise
stated) Quarterly Results Nine Months Results 3Q2006 3Q2005 YoY(%)
9M 2006 9M 2005 YoY(%) Net sales 218,516 207,859 5.1 640,527
550,059 16.4 Gross Profit 22,323 25,328 (11.9) 64,211 67,580 (5.0)
% of sales 10.2% 12.2% - 10.0% 12.3% - Operating Income (a) 12,436
14,068 (11.6) 45,084 38,124 18.3 % of sales 5.7% 6.8% - 7.0% 6.9% -
per share (diluted) $0.28 $0.33 (15.2) $1.03 $0.89 15.7 Net income
(a) 12,093 18,803 (35.7) 43,080 38,606 11.6 % of sales 5.5% 9.0% -
6.7% 7.0% - Basic earnings per share (a) $0.28 $0.44 (36.4) $0.99
$0.90 10.0 Diluted earnings per share (a) $0.28 $0.43 (34.9) $0.99
$0.90 10.0 Weighted average number of shares ('000) Basic 43,787
42,983 - 43,674 42,799 - Diluted 43,787 43,249 - 43,726 43,046 -
Note: (a) Included in operating income and net income in the first
nine months of 2006 are the following other income/expenses items:
-- $9.3 million gain on disposal of asset held for sale recorded in
the second quarter. Such gain was recognized in operating income in
accordance with Statement of Financial Accounting Standards No. 144
"Accounting for the Impairment and Disposal of Long Lived Asset".
-- $0.8 million of share-based compensation expenses in respect of
90,000 share options granted to independent and non-executive
directors, and the vesting of pre-IPO share options granted by the
Company's Hong Kong listed subsidiary, Nam Tai Electronic &
Electrical Products Limited ("NTEEP"), to NTEEP's employee upon
NTEEP's listing in April 2004. -- $1.3 million ($1.9 million before
sharing with minority interests) loss on marketable securities
arising from split share structure reform in the second quarter. In
addition to disclosing results determined in accordance with
accounting principles generally accepted in the United States ("US
GAAP") as above, the Company also presents a measure of operating
income, net income and earnings per share on a non-GAAP basis that
excludes certain income/expenses for investors' better assessment
of the Company's operating performance. Those non-GAAP financial
measures exclude certain items, such as share-based compensation
expenses, restructuring costs, realized gain or loss on the
disposal of marketable securities, investments or interests in
subsidiaries, impairment loss on marketable securities or goodwill,
or other infrequent or unusual items. Please see the below
reconciliation of GAAP operating income to non-GAAP operating
income and GAAP net income and earnings per share to non-GAAP net
income and earnings per share, and page 8 for a detailed discussion
of management's use of non-GAAP financial information. GAAP TO
NON-GAAP RECONCILIATION (In millions of US Dollars, except for per
share (diluted) and numbers of shares) Three months ended Nine
months ended September 30, September 30, 2006 2005 2006 2005
million per million per million per million per share share share
share (diluted) (diluted) (diluted) (diluted) GAAP Operating Income
12.4 0.28 14.1 0.33 45.1 1.03 38.1 0.89 Add back/ (Less): - Gain on
disposal of asset held for sale - - - - (9.3) (0.21) - - -
Share-based compensation expenses 0.1 - - - 0.8 0.02 - - -
Severance expenses in relation to the restructuring of Hong Kong
subsidiaries - - 1.0 0.02 - - 1.0 0.02 Non-GAAP Operating Income
(a) 12.5 0.28 15.1 0.35 36.6 0.84 39.1 0.91 GAAP Net Income 12.1
0.28 18.8 0.43 43.1 0.99 38.6 0.90 Add back/ (Less): - Gain on
disposal of asset held for sale - - - - (9.3) (0.21) - - -
Share-based compensation expenses 0.1 - - - 0.8 0.02 - - - Loss on
marketable securities arising from split share structure reform - -
- - 1.3 0.03 - - - Severance expenses in relation to the
restructuring of Hong Kong subsidiaries - - 1.0 0.02 - - 1.0 0.02 -
Gain from disposal of the Company's entire stake in its investment
in an affiliated company - Alpha Star - - (3.6) (0.08) - - (3.6)
(0.08) - Gain on sales of subsidiaries' shares - - (2.3) (0.05) - -
(10.1) (0.23) - Realized losses on the partial disposal of
marketable securities in TCL Communication - - 1.4 0.03 - - 1.4
0.03 - Impairment loss on marketable securities - - - - - - 6.5
0.15 - Expenses in relation to the termination of a potential
listing of one of the Company's subsidiaries in Hong Kong - - - - -
- 1.3 0.03 Non-GAAP Net Income (a) 12.2 0.28 15.3 0.35 35.9 0.83
35.1 0.82 Weighted average number of shares - diluted ('000) 43,787
43,249 43,726 43,046 Note: (a) Please see page 8 for a detailed
discussion of management's use of non-GAAP financial information.
THIRD QUARTER AND YEAR TO DATE REVIEW In view of the lower than
expected sales and a change of the product mix with lower margins
during the third quarter of 2006, Nam Tai announced revised sales
and earnings guidance for the third quarter of 2006 on September 1,
2006. Net sales for the third quarter of 2006 were in line with
that revised guidance. As a result of implementing cost-control
measures in an effort to combat adverse market conditions during
the third quarter of 2006, the Company achieved slightly better
than expected non-GAAP operating income per share (diluted) and
non-GAAP earnings per share (diluted). However, overall results for
the third quarter of 2006 were still disappointing as compared with
those of Nam Tai's third quarter of 2005 and its original guidance
for the third quarter of 2006 announced on July 31, 2006. Nam Tai's
net sales for its third quarter of 2006 was $218.5 million, an
increase of 5.1% as compared to $207.9 million in the third quarter
of 2005. Operating income for the third quarter of 2006 was $12.4
million, or $0.28 per share (diluted), a decrease of 11.6% as
compared to operating income of $14.1 million, or $0.33 per share
for the same period last year. Net income for the third quarter of
2006 was $12.1 million, a decrease of 35.7% as compared to $18.8
million in the third quarter of 2005. Both non-GAAP operating
income per share (diluted) and non-GAAP earnings per share
(diluted) for the third quarter of 2006 were $0.28, a decrease of
20% as compared to $0.35 for each of those non-GAAP measures in the
same period last year. For the nine months ended September 30,
2006, Nam Tai's net sales were $640.5 million, an increase of 16.4%
as compared to $550.1 million in the same period last year.
Operating income for the first nine months of 2006 was $45.1
million, or $1.03 per share (diluted), an increase of 18.3% as
compared with $38.1 million, or $0.89 per share (diluted), in the
same period last year. Net Income for the first nine months of 2006
was $43.1 million, or $0.99 per share, an increase of 11.6% as
compared to $38.6 million or $0.90 per share in the same period
last year. Ms. Patinda Lei, Nam Tai's Chief Executive Officer and
Chief Financial Officer commented, "Despite the challenging
business environment, the Company is very much encouraged that its
gross profit margins for the third quarter of 2006 improved to
10.2% from 9.7% in the second quarter of 2006. The Company
continued to be successful in controlling its selling, general and
administrative ("SG&A") expense as well as research and
development ("R&D") expenses. Total SG&A and R&D
expenses as a percentage of sales decreased to 4.5% in the third
quarter of 2006 as compared to 5.4% in the same period last year,
which included $0.96 million of severance expenses, or 0.5% as a
percentage of net sales, incurred in relation to the restructuring
of Nam Tai's Hong Kong subsidiaries in the third quarter of 2005."
The Company's financial position remains strong and net cash
provided by operating activities during the third quarter of 2006
was $26.0 million. The Company also had $227.0 million cash on hand
even after capital expenditures of $9.1 million made and second
quarter dividends of $16.6 million paid to stockholders on July 21,
2006. Moreover, the Company's other financial ratios remain
healthy. COMPANY OUTLOOK Looking ahead, on the strong foundation of
its key component subassemblies of telecommunication products
business, Nam Tai will actively seek opportunities for further
business diversification. To sharpen its competitive edge, the
Company is stepping up vertical integration of the key component
subassemblies of telecommunication products business. Nam Tai's
investment in the vertical integration of its flexible printed
circuit ("FPC") business by moving upstream to commence FPC unit
manufacturing is on schedule. The Company has begun trial
production of FPC units recently. In addition to applying for the
approval of Underwriters Laboratories ("UL") Standards for Safety,
the Company has also provided samples for customers' approval. It
is expected that the mass production will be commenced in the
second quarter of 2007 on schedule. With aggressive marketing
strategies, the Company recently was successful in winning two new
customers. In addition to its wholly owned subsidiary, Zastron
Electronic (Shenzhen) Co. Ltd. entering into an agreement with
QUALCOMM MEMS Technologies, Inc., a wholly owned subsidiary of
QUALCOMM Incorporated, to provide module assembly services for
QUALCOMM's iMoD(TM) displays, Nam Tai has also won a new customer
order from a leading global provider of digital office solution to
manufacture 1.3 mega pixel CMOS image sensor modules for notebook
computers with built-in camera functions. With a goal to boost
sales and enhance profitability, the Company plans to continue
efforts to expand its customer base and diversify its product lines
consistent with Nam Tai's strategy to produce higher value and more
sophisticated products. Facing the same intense competition and
pricing pressures during the third quarter as were present in the
previous quarter, Nam Tai's long-term strategy is to continue its
emphasis on controlling expenses, seeking better pricing and terms
from its suppliers and selectively focusing resources to better
target higher margin orders. In addition to the expansion project
to build a new factory in Shenzhen, PRC, the Company continues to
implement its plans to establish in the near future an industrial
presence in Wuxi, Jiangsu Province, located on the East Coast of
the PRC, approximately 80 miles Northwest of Shanghai. The Company
has recently entered into an official agreement with Wuxi
government for the project. Nam Tai expects that the launch of its
project to establish a presence in Wuxi, together with its expanded
facilities in Shenzhen, will position the Company to capitalize on
strong growth in demand for high- technology consumer electronic
products anticipated by the Company over the next few years. The
expansion projects for Nam Tai's new factory in Shenzhen and
facilities in Wuxi are expected to commence in the summer of 2007.
Ms. Lei concluded, "While the Company is implementing a series of
strategies to improve profitability, Nam Tai is still confident to
achieve sales growth for year 2006 of approximately 10% as compared
to the sales level in 2005, and annual sales growth of 12% in 2007
and 2008. With aggressive expansion plans in place and orders from
both existing and new customers continuing, the Company is
optimistic about its long-term prospects. It is Nam Tai's long-term
prospects and growth that is and should be the focus of our
concentration, especially in this challenging business environment.
Accordingly, as we previously announced on July 31, 2006, we have
reconsidered our practice of providing short-term forecasts and
will no longer provide quarterly sales and earnings per share
guidance. Through press releases and our quarterly conference calls
with interested investors and the investment community, the Company
plans on continuing to furnish investors with information and
insight into our strategies and key drivers of long-term financial
performance, the progress of our expansion plans and trends in our
business and industry necessary to understand Nam Tai's business
and operating environment." SARBANES-OXLEY ACT The Company is
working towards compliance with the relevant sections of the
Sarbanes-Oxley Act in accordance with the timetable set out by the
relevant regulations. SUPPLEMENTARY INFORMATION (UNAUDITED) FOR THE
THIRD QUARTER OF 2006 1. Quarterly Sales Breakdown (In thousands of
US Dollars, except percentage information) YoY(%) YoY(%) (Quarterly
Quarter 2006 2005 (Quarterly) accumulated) 1st Quarter 208,358
156,923 32.8 32.8 2nd Quarter 213,653 185,277 15.3 23.3 3rd Quarter
218,516 207,859 5.1 16.4 4th Quarter 247,178 Total 640,527 797,237
2. Breakdown of Net Sales by Product Segment as a Percentage of
Total Net Sales 2006 2005 Segment 3Q YTD 3Q YTD (%) (%) (%) (%)
Consumer Electronics and Communication Products: - Consumer
Electronics and Communication Products 23% 20% 21% 23% - Software
Development Services 0% 1% 1% 1% Telecom. Components Assembly 68%
72% 70% 68% Parts & Components: - LCD Panels 9% 7% 8% 8% 100%
100% 100% 100% 3. Key Highlights of Financial Position (unaudited)
(audited) As at September 30 As at December 31 2006 2005 2005 Cash
on Hand(a) $ 227.0 million $190.4 million $213.8 million Marketable
Securities $ 22.9 million $16.2 million $13.3 million Ratio of
Cash(a) to Current Liabilities 1.27 1.28 1.30 Current Ratio 2.33
2.49 2.42 Ratio of Total Assets to Total Liabilities 3.02 3.27 3.10
Return on Equity 18.3% 16.8% 16.7% Ratio of Total Liabilities to
Equity 0.57 0.50 0.54 Debtors Turnover 55 days 60 days 58 days
Inventory Turnover 15 days 20 days 16 days Average Payable Period
65 days 61 days 63 days Note: (a) Includes cash equivalents. THIRD
QUARTER RESULTS ANALYST CONFERENCE CALL The Company will hold a
conference call on Tuesday, October 31, 2006 at 8:30 a.m. Eastern
Time for analysts to discuss Nam Tai's third quarter results with
management. Shareholders, media, and interested investors are
invited to listen to the live conference over the internet by going
to http://www.namtai.com/ and clicking on the conference call link
(under events) or over the phone by dialing (651) 291-5254 just
prior to its start time. DIVIDENDS The third quarter 2006 dividend
of $0.38 per share was paid in October 2006 on schedule. The record
date for the fourth quarter dividend of $0.38 per share is December
31, 2006 and the payment date is expected to be on or before
January 21, 2007. Under its new dividend policy effective from year
2007, the Company will pay the first quarter 2007 dividend of $0.21
per share in April 2007. Information of quarterly dividends
scheduled for payment is as follows: Quarterly Record Date
Scheduled Payment Date Dividend Payment (per share) Q3/06 September
30, 2006 On or before October 21, 2006 (Paid) $0.38 Q4/06 December
31, 2006 On or before January 21, 2007 $0.38 Q1/07 March 31, 2007
On or before April 21, 2007 $0.21 Q2/07 June 30, 2007 On or before
July 21, 2007 $0.21 Q3/07 September 30, 2007 On or before October
21, 2007 $0.21 Q4/07 December 31, 2007 On or before January 21,
2008 $0.21 CHANGES TO BOARD OF DIRECTORS The Company is pleased to
announce that Mr. Seitaro Furukawa has been appointed as a new
non-executive director of the Company with effect from November 1,
2006, replacing Mr. Stephen Seung who resigned from Nam Tai's board
for personal reasons. In his letter of resignation, which was
accepted by the Company's Board of Directors on October 27, 2006,
Mr. Seung advised that he will continue to support and cooperate
with Nam Tai in the future. Mr. Furukawa, age 65, is retiring as
the Chairman of the Board of the Company's subsidiary, J.I.C. on
October 31, 2006. After joining the J.I.C. group in 1992 as a
Managing Director, Mr. Furukawa assumed responsibility for
production management and monitoring J.I.C.'s day-to-day operations
in its liquid crystal display factory in Shenzhen, PRC. He has
extensive experience in international operations management. He
held management positions in Japan offices of General Electric,
Admiral International Company and Thompson-CSF (renamed Thales
Group in December 2000). The Board of Directors expresses its
sincere gratitude to Mr. Seung for his valuable contributions and
guidance during his long service to Nam Tai. FORWARD-LOOKING
STATEMENTS Statements concerning the Company's outlook and targeted
growth rates, expected performance during the fourth quarter of
2006 and for 2006 as a whole, including estimated sales, estimated
gross profit margins, estimated non-GAAP operating income per share
(diluted) and non-GAAP earnings per share (diluted) for the fourth
quarter of 2006, estimates of planned capital expenditures, the
amount of funds to be expended therefor, the sufficiency of funds
available for such expansion from internally generated funds, cash
and cash equivalents on hand and expected in the future, the
financing and sources of financing for the contemplated capital
expenditures, among other statements in this press release, are
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements may be identified
by the use of words like "believes," "intends," "expects," "plans"
or "planned," "may," "will," "should" or "anticipates," or the
negative equivalents of those words or comparable terminology, and
involve risks and uncertainties. Such statements are based on
current expectations and assumptions and reflect our views with
respect to future events and may not actually occur during the
periods indicated or at all and are not a guarantee of our future
performance. These forward-looking statements are, by their nature,
subject to risks, uncertainties and other factors that could cause
the actual results to differ materially from future results
expressed or implied by the forward-looking statements in this
press release. Whether the Company's outlook and targeted growth
rates, whether the financial performance it expects during the
fourth quarter of 2006 and for 2006 as a whole; whether the amounts
budgeted for capital expenditures for any or all of the expansion
projects will be sufficient to fund the planned expansion projects
during each of the periods indicated, whether the Company will be
able to finance them and fund operations as currently contemplated,
whether expected savings from the revision of its dividend policy
and the anticipated savings from the contemplated adjustments in
the amount of Nam Tai's dividends, whether the Company can or will
able to stage its planned expansion in the periods of time
contemplated, whether Nam Tai will need to seek alternative sources
of capital or limit or abandon the planned expansion, whether
additional adjustments to Nam Tai's dividend policy may be required
or whether future dividends will actually be declared, or even if
declared, continued, will depend upon the Company's operating
income, available and estimated future cash and cash equivalents
and anticipated cash flows during each of the periods contemplated
and the actual level of capital expenditures required for each of
the planned expansion projects. Nam Tai's growth, operating income,
available cash, cash flows and levels of capital expenditures, and
Nam Tai's declaration or payment of dividends, may be adversely
affected by numerous factors including Nam Tai's dependence on a
few large customers; intense competition in the electronics
industry in which the Company participates; Nam Tai being subject
to continuing pressure on its margins; its operating results
fluctuating and lacking predictability; risks relating to its doing
business in China such as arising from changes in governmental
policies, taxation, trade regulation, and currency exchange rates;
the timing and amount of significant orders from customers; delays
in product development and related product release schedules;
obsolete inventory or product returns; warranty and other claims on
products; technological shifts; the availability of competitive
products of comparable quality at prices below Nam Tai's prices;
maturing product life cycles; concessions Nam Tai may make on
product sale terms and conditions; implementation of operating cost
structures that align with revenue growth, if any; the financial
condition of Nam Tai's customers and vendors and those companies in
which Nam Tai holds marketable securities or other investments; the
availability and increasing costs of materials and other components
needed to manufacture its products; adverse results in litigation,
including its on-going securities class action litigation;
potential shortages of materials or skilled labor needed for its
planned expansion projects or for its existing facilities;
unforeseen engineering problems, work stoppages, weather
interference, flood, earthquake or other acts of God, delays in
obtaining or failure to obtain necessary permits from regulatory
authorities, other unexpected project delays or unanticipated costs
increases; risks of expanding into new areas such as in Eastern
Europe with different languages and culture, political, monetary,
economic, financial or monetary systems different from those of
Hong Kong or China, where Nam Tai currently has offices or
significant operations or the existence of accounting principles or
controls substantially different from US GAAP under which Nam Tai
reports its financial statements; diversion of management's
attention to expansion and its management to new locations and to
other business concerns; the impact of legislative actions, higher
insurance costs and potential new accounting pronouncements; a
worsening of relations between China and the United States or
Taiwan; the effects of terrorist activity and armed conflict such
as disruptions in general economic activity and changes in Nam
Tai's operations and security arrangements; the effects of travel
restrictions and quarantines associated with major health problems,
such as the Severe Acute Respiratory Syndrome or Bird Flu, on
general economic activity; or other changes in general economic
conditions that affect demand for Nam Tai's products and by one or
more the factors discussed in Item 3. Key Information - Risk
Factors in its Annual Report on Form 20-F for the year ended
December 31, 2005 as filed with the Securities and Exchange
Commission ("SEC"). For further information regarding risks and
uncertainties associated with Nam Tai's business, please refer to
the "Management's Discussion and Analysis of Results of Operations
and Financial Condition" and "Risk Factors" sections of Nam Tai's
SEC filings, including, but not limited to, its annual report on
Form 20-F, copies of which may be obtained by contacting Pan
Pacific I. R. Limited, Nam Tai's investor relations firm, or from
Nam Tai's website at http://www.namtai.com/. All information in
this press release is as of October 31, 2006. Nam Tai undertakes no
duty to update any forward-looking statement to conform the
statement to actual results or changes in Nam Tai's expectations.
ABOUT NAM TAI ELECTRONICS, INC. We are an electronics manufacturing
and design services provider to a select group of the world's
leading OEMs of telecommunications and consumer electronic
products. Through our electronics manufacturing services
operations, we manufacture electronic components and
sub-assemblies, including LCD panels, LCD modules, RF modules, DAB
modules, FPC sub-assemblies, image sensors modules and PCBA for
Bluetooth(TM) headsets. These components are used in numerous
electronic products, including cellular phones, laptop computers,
digital cameras, electronic toys, handheld video game devices,
entertainment devices and microwave ovens. We also manufacture
finished products, including cellular phones in semi-knocked down
("SKD"), form, mobile phone accessories and educational products.
Nam Tai has two Hong Kong listed subsidiaries, Nam Tai Electronic
& Electrical Products Limited ("NTEEP") and J.I.C. Technology
Company Limited ("JIC"). Interested investors may go to the website
of The Stock Exchange of Hong Kong Limited at
http://www.hkex.com.hk/ to obtain the information. The stock code
of NTEEP and JIC on The Stock Exchange of Hong Kong Limited are
2633 and 987, respectively. Investors are reminded to exercise
caution when assessing such information and not to deal with the
shares of the Company based solely on reliance of such information.
The results of NTEEP and JIC only represent a part of the results
of the Company and there are GAAP differences in the financial
statements of NTEEP and JIC, when compared with the financial
statements of the Company. Furthermore, different subsidiaries of
the Company may have a different peak season during a year.
NON-GAAP INFORMATION In addition to disclosing results determined
in accordance with accounting principles generally accepted in the
United States ("US GAAP"), the Company also presents a measure of
operating income, net income and earnings per share on a non-GAAP
basis that excludes certain income/expenses for investors' better
assessment of the Company's operating performance. Those non-GAAP
financial measures exclude certain items, such as share-based
compensation expenses, restructuring costs, realized gain or loss
on the disposal of marketable securities, investments or interests
in subsidiaries, impairment loss on marketable securities or
goodwill, or other infrequent or unusual items. By disclosing this
non-GAAP information, management intends to provide investors with
additional information to analyze the Company's performance, core
results and underlying trends. Non-GAAP information is not
determined using US GAAP; therefore, the information is not
necessarily comparable to other companies and should not be used to
compare the Company's performance over different periods. Non-GAAP
information should not be viewed as a substitute for, or superior
to, net income or other data prepared in accordance with US GAAP as
measures of our profitability or liquidity. Users of this financial
information should consider the types of events and transactions
for which adjustments have been made. See the table in the press
release on page 2 for a reconciliation of non-GAAP amounts to
amounts reported under US GAAP. NAM TAI ELECTRONICS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDED SEPTEMBER
30, 2006 AND 2005 (In Thousands of US Dollars except share and per
share data) Unaudited Unaudited Three months ended Nine months
ended September 30 September 30 2006 2005 2006 2005 Net sales -
related parties $- $31 $- $6,174 Net sales - third parties 218,516
207,828 640,527 543,885 Total net sales 218,516 207,859 640,527
550,059 Cost of sales 196,193 182,531 576,316 482,479 Gross profit
22,323 25,328 64,211 67,580 Gain on disposal of asset held for sale
- - 9,258 - Costs and expenses Selling, general and administrative
expenses 7,947 9,359 22,539 24,399 Research and development
expenses 1,940 1,901 5,846 5,057 9,887 11,260 28,385 29,456
Operating income 12,436 14,068 45,084 38,124 Other income
(expenses) - net (153) 2,231 (761) (63) Gain on partial disposal of
subsidiaries - 2,295 - 10,095 Gain on disposal of investment in an
affiliated company - 3,631 3,631 Loss on marketable securities
arising from split share structure reform - - (1,869) - Impairment
loss on marketable securities - - - (6,525) Realized loss on
marketable securities - (1,421) - (1,421) Interest income 2,328
1,014 6,146 2,474 Interest expense (144) (118) (456) (302) Income
before income taxes and minority interests 14,467 21,700 48,144
46,013 Income taxes (44) (174) (307) (511) Income before minority
interests and equity in loss of an affiliated company 14,423 21,526
47,837 45,502 Minority interests (2,330) (2,679) (4,757) (6,710)
Income after minority interests 12,093 18,847 43,080 38,792 Equity
in loss of an affiliated company - (44) - (186) Net income $12,093
$18,803 $43,080 38,606 Net income per share Basic $0.28 $0.44 $0.99
$0.90 Diluted $0.28 $0.43 $0.99 $0.90 Weighted average number of
shares ('000') Basic 43,787 42,983 43,674 42,799 Diluted 43,787
43,249 43,726 43,046 NAM TAI ELECTRONICS, INC. CONSOLIDATED BALANCE
SHEETS AS AT SEPTEMBER 30, 2006 AND DECEMBER 31, 2005 (In Thousands
of US Dollars) Unaudited Audited September 30 December 31 2006 2005
ASSETS (Note) Current assets: Cash and cash equivalents $227,016
$213,843 Marketable securities 22,936 13,330 Accounts receivable,
net 128,176 125,662 Inventories 32,229 31,744 Prepaid expenses and
other receivables 3,676 1,490 Income taxes recoverable 4,198 2,671
Assets held for sale - 10,912 Total current assets 418,231 399,652
Property, plant and equipment, net 94,859 97,997 Land use right
2,691 2,744 Deposits for property, plant and equipment 9,745 1,250
Goodwill 18,476 17,068 Other assets 1,134 1,300 Total assets
$545,136 $520,011 LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Notes payable $5,576 $4,813 Short-term bank loans
2,472 2,275 Long-term bank loans - current portion 1,750 2,312
Accounts payable 137,662 121,608 Accrued expenses and other
payables 14,931 19,447 Dividend payable 16,639 14,357 Income taxes
payable 166 166 Total current liabilities 179,196 164,978 Long-term
bank loans - non-current portion 1,538 2,850 Total liabilities
180,734 167,828 Minority interests 46,578 41,792 Shareholders'
equity: Common shares 438 435 Additional paid-in capital 264,321
258,167 Retained earnings 43,993 50,771 Accumulated other
comprehensive income (Note 1) 9,072 1,018 Total shareholders'
equity 317,824 310,391 Total liabilities and shareholders' equity
$545,136 $520,011 Note: Information extracted from the audited
financial statements included in the 2005 Form 20-F of the Company
filed on March 15, 2006. NAM TAI ELECTRONICS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE PERIODS ENDED
SEPTEMBER 30, 2006 AND 2005 (In Thousands of US Dollars) Unaudited
Unaudited Three months ended Nine months ended September 30
September 30 2006 2005 2006 2005 CASH FLOWS FROM OPERATING
ACTIVITIES Net income $12,093 $18,803 $43,080 $38,606 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization of property, plant and
equipment 4,593 4,391 14,191 12,483 Amortization of intangible
assets - 414 - 460 Net gain on disposal of property, plant and
equipment (50) (680) (190) (650) Net gain on disposal of assets
held for sale - - (9,258) - Loss on marketable securities arising
from split share structure reform - - 1,869 - Gain on partial
disposal of subsidiaries - (2,295) - (10,095) Gain on disposal of
investment in an affiliated company - (3,631) - (3,631) Impairment
loss on marketable securities - - - 6,525 Share-based compensation
expenses 84 - 770 - Realized loss on marketable securities - 1,421
- 1,421 Equity in loss of an affiliated company - 44 - 186 Minority
interests 2,330 2,679 4,757 6,710 Changes in current assets and
liabilities: Increase in accounts receivable (15,157) (25,694)
(2,514) (29,322) Decrease in amount due from a related party - - -
66 Increase in inventories (3,346) (9,360) (485) (11,940)
(Increase) decrease in prepaid expenses and other receivables
(1,942) 856 (2,186) 248 Increase in income taxes recoverable (215)
(1,004) (1,527) (2,375) Increase (decrease) in notes payable 1,044
(246) 763 1,613 Increase in accounts payable 29,047 33,773 16,054
16,958 (Decrease) increase in accrued expenses and other payables
(2,347) 2,255 (4,516) 2,860 (Decrease) increase in amount due to a
related party - (138) - 21 Increase in income taxes payable - 40 -
22 Others (150) (1,032) (592) 105 Total adjustments 13,891 1,793
17,136 (8,335) Net cash provided by operating activities $25,984
$20,596 $60,216 $30,271 CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (4,697) (4,637) (11,109)
(23,507) Increase (decrease) in deposit for purchase of property,
plant & equipment (4,420) 726 (8,495) 6,558 Increase in other
assets - - 166 - Proceeds from disposal of property, plant and
equipment 101 1,732 286 1,780 Proceeds from disposal of marketable
securities - 7,579 7,579 Proceeds from disposal of assets held for
sale - - 20,170 - Proceeds from disposal of investment in an
affiliated company - 6,494 - 6,494 Acquisition of additional shares
in subsidiaries (1,010) - (3,130) - Proceeds from partial disposal
of subsidiaries - 5,163 - 25,218 Net cash (used in) provided by
investing activities $(10,026) $17,057 $(2,112) $24,122 CASH FLOWS
FROM FINANCING ACTIVITIES Cash dividends paid $(16,639) $(16,166)
$(49,285) $(37,687) Repayment of bank loans (1,191) (769) (5,157)
(2,257) Proceeds from bank loans - 1,700 3,480 2,500 Proceeds from
shares issued on exercise of options - 11,926 5,439 12,928 Net cash
used in financing activities $(17,830) $(3,309) $(45,523) $(24,516)
Net (decrease) increase in cash and cash equivalents (1,872) 34,344
12,581 29,877 Cash and cash equivalents at beginning of period
228,738 155,045 213,843 160,649 Effect of exchange rate changes on
cash and cash equivalents 150 1,032 592 (105) Cash and cash
equivalents at end of period $227,016 $190,421 $227,016 $190,421
NAM TAI ELECTRONICS, INC. NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Unaudited) FOR THE PERIODS ENDED SEPTEMBER 30, 2006 AND
2005 (In Thousands of US Dollars) (1) Accumulated other
comprehensive income represents foreign currency translation
adjustments and unrealized gain (loss) on marketable securities.
The comprehensive income of the Company was $51,134 and $30,735 for
the nine months ended September 30, 2006 and September 30, 2005,
respectively. (2) Business segment information - The Company
operates primarily in three segments, the Consumer Electronics and
Communication Products ("CECP") segment, Telecom. Components
Assembly ("TCA") segment, and the LCD Panels ("LCDP") segment.
Unaudited Unaudited Three months ended Nine months ended September
30 September 30 2006 2005 2006 2005 NET SALES: - CECP $50,731
$46,629 $129,422 $128,325 - TCA 148,538 145,045 462,924 377,572 -
LCDP 19,247 16,185 48,181 44,162 Total net sales $218,516 $207,859
$640,527 $550,059 NET INCOME: - CECP $4,548 $5,260 $8,923 $14,375 -
TCA 6,218 9,432 22,384 22,839 - LCDP 1,169 1,076 2,575 2,796 -
Corporate 158 3,035 9,198 (1,404) Total net income $12,093 $18,803
$43,080 $38,606 Unaudited Audited Sept. 30, 2006 Dec. 31, 2005
IDENTIFIABLE ASSETS BY SEGMENT: - CECP $179,054 $148,173 - TCA
169,022 170,624 - LCDP 60,979 57,736 - Corporate 136,081 143,478
Total assets $545,136 $520,011 (3) A summary of the net sales, net
income and long-lived assets by geographic areas is as follows:
Unaudited Unaudited Three months ended Nine months ended September
30 September 30 2006 2005 2006 2005 NET SALES FROM OPERATIONS
WITHIN: - Hong Kong and Macao: Unaffiliated customers $- $16,185 $-
$44,162 Intercompany sales - 96 - 522 - PRC, excluding Hong Kong
and Macao: Unaffiliated customers 218,516 191,643 640,527 499,723
Related party - 31 - 6,174 Intercompany sales 52 - 348 - -
Intercompany eliminations (52) (96) (348) (522) Total net sales
$218,516 $207,859 $640,527 $550,059 NET INCOME FROM OPERATIONS
WITHIN: - PRC, excluding Hong Kong and Macao $6,048 $9,638 $12,563
$23,813 - Macao 6,747 7,391 24,610 21,662 - Hong Kong (702) 1,774
5,907 (6,869) Total net income $12,093 $18,803 $43,080 $38,606
Unaudited Audited Sept. 30, 2006 Dec. 31, 2005 LONG-LIVED ASSETS
WITHIN: - PRC, excluding Hong Kong and Macao $97,236 $100,372 -
Macao 52 88 - Hong Kong 262 281 Total long-lived assets $97,550
$100,741 DATASOURCE: Nam Tai Electronics, Inc. CONTACT: Lorne
Waldman, President of Pan Pacific I.R. Ltd., +1-604-669-7800,
1-800-661-8831, for Nam Tai Electronics, Inc. Web site:
http://www.namtai.com/
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