[GRAPHIC OMITTED] NTE
NAM TAI ELECTRONICS, INC. LISTED
NYSE FIRST QUARTER NEWS RELEASE
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REPRESENTED BY PAN PACIFIC I.R. LTD. CONTACT: Lorne Waldman
1790 - 999 WEST HASTINGS STREET President
VANCOUVER, BC, CANADA V6C 2W2 E-MAIL: shareholder@namtai.com
TEL: (604) 669-7800 FAX: (604) 669-7816 WEB: www.namtai.com
TOLL FREE TEL/FAX: 1-800-661-8831
NAM TAI ELECTRONICS, INC.
Q1 Sales Up 8.5% to $95.4 Million vs. $88.0 Million, EPS $0.18 vs. $0.25
VANCOUVER, CANADA -- April 30, 2004 -- Nam Tai Electronics, Inc. ("Nam Tai" or
the "Company") (NYSE Symbol: NTE; CBOE Symbol: QNA; Frankfurt Stock Exchange
Symbol: 884852) announced unaudited results for the first quarter ended March
31, 2004.
KEY HIGHLIGHTS
1. Summarized Statement of Incomes
(In thousands of US Dollars, except as otherwise stated)
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Quarterly Results
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Q1/04 Q1/03 YoY(%)
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Net sales 95,435 87,981 8.5
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Income from operations 6,931 8,864 (21.8)
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per share(diluted) (1) 0.17 0.22 (22.7)
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Net income 7,387 10,210 (27.6)
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% of sales 7.7% 11.6%
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Basic earnings per share (1) 0.18 0.26 (30.8)
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Diluted earnings per share (1) 0.18 0.25 (28.0)
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Weighted average number of shares ('000')
Basic (1) 41,231 39,986 --
Diluted (1) 41,292 40,477 --
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Note: (1) All share and earnings per share data for Q1/03 have been adjusted for the 3 for 1 stock split effective
June 30, 2003 and the 10 for 1 stock dividend effective November 7, 2003.
2. Quarterly Sales Breakdown
(In thousands of US Dollars, except percentages)
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Quarter 2003 2004 YoY(%)
(Quarterly)
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1st Quarter 87,981 95,435 8.5%
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2nd Quarter 116,714 -- --
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3rd Quarter 93,157 -- --
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4th Quarter 108,454 -- --
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Total 406,306 95,435 --
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3. Net Sales Breakdown by Product Segment
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2004 2003
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Segment 1st Quarter YTD 1st Quarter YTD
(%) (%) (%) (%)
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Assembling:
- LCD Consumer Products 22% 22% 41% 41%
- Telecom. Components Assembly 65% 65% 46% 46%
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Software Development Services 1% 1% 1% 1%
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Parts & Components:
- LCD Panels 12% 12% 8% 8%
- Transformers -- -- 4% 4%
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100% 100% 100% 100%
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Note: In June 2003, we sold our transformers operation to a third party.
Assembling included finished goods and modules, together with Software
Development Services collectively termed as Consumer Electronic Products
("CEP"), while Parts and Components including LCD panels and transformers are
termed ("LPT") for business segment classification.
"We are pleased to see the growth of sales of 8.5% in this quarter when compared
with the same quarter last year. The sales, the gross margin as well as earnings
per share for the first quarter were in line with our internal budget forecast.
Nevertheless, the income from operations was affected by the following factors:
o Changes in product mix.
o Lower sales in the LCD Consumer Products segment due to discontinuation of
old products, and a delay in the development of certain new products.
o Gross margin decreased by 0.8% as a result of the reduction to the Value
Added Tax ("VAT") refund by PRC government effective January 2004. However,
we were still able to achieve the Company's target gross margin of 15%.
o Additional headcounts and recruitment of new senior executives together
with sales commission paid which led to increased SG&A expenses. Our R&D
expenses also increased in line with our expansion.
o Historical seasonal factor on sales in relation to the long Chinese New
Year holiday.
We are also very happy to see strong growth in our business of Telecommunication
Components Assembly and LCD panels. Compared with last year during the same
quarter, sales from Telecommunication Components Assembly and LCD panels
increased by 52% and 55%, respectively. Despite the global component shortage in
the first quarter, our operations were not materially affected. We are confident
on the growth of our sales and income from operations this year, and strongly
believe that we will be able to achieve a year over year growth target," said
Mr. Murakami, Chairman of Nam Tai.
Company Outlook
The Company has decided to give guidance to the market on its sales and earnings
per share of the forthcoming quarter starting from this quarter. According to
market information and order situation, the Company believes and projects its
sales for the second quarter 2004 to be approximately between $125 million and
$140 million, and diluted earnings per share to be between $1.75 and $1.83,
taking into account of:
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1. a one time gain of over approximately $65 million or $1.5 per share
(subject to final adjustment and based on the increased number of
outstanding shares) which resulted from the recent IPO of Nam Tai
Electronic & Electrical Products Limited ("NTEEP") in Hong Kong,
2. the creation of a minority interest in the financial statements of Nam Tai
on the IPO of NTEEP, and
3. the increased number of outstanding shares of 43.6 million.
Key Highlights of Supplementary Financial Position
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(unaudited) (audited)
As at March 31 As at December 31
2004 2003
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Cash on Hand $63.3 million $61.8 million
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Cash/Current Liabilities 0.85 0.83
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Current Ratio 2.26 2.29
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Total Assets/Total Liabilities 3.93 3.88
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Debtors Turnover 56 days 58 days
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Inventory Turnover 10 times 13 times
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Whilst the other financial ratios remained constant, our inventory level is
relatively higher as a result of expected higher sales in the coming months.
With $9.8 million of net cash provided by operating activities in the first
quarter of 2004, the Company continues to maintain a strong financial position,
with approximately $63.3 million of cash on hand as of March 31, 2004.
Furthermore, we have no material long-term debt or short-term debt. With our
strong cash position, we expect to be able to finance our investment and
expansion of business internally in the foreseeable future. As a result, we are
not subject to any material risk in relation to any rise in interest rates. The
Company believes recent macro-economic measures in China are mainly targeting
PRC stated own enterprises. The Company therefore does not see any material
impact of such measures on its business.
On April 28, 2004, we received approximately over $90 million net proceeds from
the IPO of our subsidiary, NTEEP, in Hong Kong during the second quarter of
2004. After paying off the $25 million consideration in relation to the further
acquisition of shareholding in TCL Mobile to 9% on April 21, 2004, the Company
now has approximately $128.3 million of cash on hand. Our cash position before
and after the above events is summarized as follows:
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Date US$ Balance (US$) Remark
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March 31, 2004 63.3 million 63.3 million
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April 21, 2004 25.0 million 38.3 million Cash outflow - cash consideration paid for the
increase in shareholding in TCL Mobile
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April 28, 2004 90.0 million 128.3 million Cash inflow - proceeds received from the IPO of
NTEEP. The IPO of NTEEP creates a one time gain of
approximately $65 million to Nam Tai or
approximately $1.5 per share based on the
increased number of outstanding shares.
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We are pleased to see the recent intended joint venture between TCL Mobile and
Alcatel SA. We believe the same will add value to our 9% interest in TCL Mobile.
TCL Corporation has also announced the intended IPO of TCL Mobile in Hong Kong.
We shall issue a further news release when we have more details. With $128.3
million cash on hand and cash generated from operating activities, the Company
is in strong financial position. The Company will continue to look for
investment opportunities, like our investment in TCL Mobile and Stepmind, to
benefit our shareholders and for continuous expansion at the appropriate time,
including but not limited to, the acquisition of land for future expansion
purposes and the expansion of production capabilities and capacity.
The listing of NTEEP in Hong Kong will not materially affect the presentation of
the Company's financial statements pursuant to US GAAP. We therefore believe
that the spinning off of NTEEP and the use of proceeds from the IPO of NTEEP in
investments like TCL Mobile are in the interest of the Company and our
shareholders, both in the short term and in the long term.
Within Nam Tai, we currently have four subsidiary groups. Two of them have
already been listed in Hong Kong. Based on the closing price on April 30, 2004,
the market capitalization of our listed subsidiaries in Hong Kong, namely J.I.C.
Technology Company Limited ("JIC") and NTEEP, are respectively $94.0 million and
$364.0 million. We currently hold 88.39% of JIC (on a fully diluted basis) and
75% of NTEEP. Our investment in TCL Corporation is booked at cost and the market
price of our investment in TCL Corporation has not yet been reflected in our
financial statements.
First Quarter Results Analyst Conference Call
The Company will hold a conference call on Monday, May 3, 2004 at 10:00 a.m.
Eastern Time for analysts to discuss the first quarter results with management.
Shareholders, media, and interested investors are invited to listen to the live
conference over the internet by going to www.namtai.com/news/news.htm and
clicking on the conference call link or over the phone by dialing (612) 288-0329
just prior to its start time.
Dividends
The record date for the second quarter dividend of $0.12 per share is June 30,
2004 and the payment date is July 21, 2004.
Annual General Meeting
The Company will hold its Annual Shareholders' Meeting at 11:30 a.m. (ET) on
Friday, June 11, 2004 at The Peninsula New York, 700 Fifth Avenue at 55th
Street, New York, NY. The record date for voting is May 7, 2004.
About Nam Tai Electronics, Inc.
We are an electronics manufacturing and design services provider to original
equipment manufacturers of telecommunications and consumer electronic products.
Through our electronics manufacturing services operations, we manufacture
electronic components and subassemblies, including LCD panels, LCD modules,
radio frequency modules, flexible printed circuit sub-assemblies and image
sensors. These components are used in numerous electronic products, including
cellular phones, laptop computers, digital cameras, copiers, fax machines,
electronic toys, handheld video game devices and microwave ovens. We also
manufacture finished products, including cellular phones, palm-sized PCs,
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personal digital assistants, electronic dictionaries, calculators and digital
camera accessories for use with cellular phones.
Forward-Looking Statements
Certain statements in this press release are "forward-looking statements" within
the meaning of U.S. federal securities laws. Nam Tai intends that these
statements be covered by the safe harbors created under these laws. 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. These
forward-looking statements include, without limitation, statements relating to
the Company's projected sales and (diluted) earnings per share for the second
quarter of 2004, and the ability of the Company to finance investments and
business expansions through internal resources in the foreseeable future. These
forward-looking statements reflect our current views with respect to future
events and are not a guarantee of our future performance. There are important
factors that could cause the actual results to differ materially from the
information set forth in these forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on the
forward-looking statements which only speak as of the date of this press
release. Because of these risks, uncertainties and assumptions, the
forward-looking events and circumstances discussed in this news release might
not occur the way we expect, or at all. Nam Tai does not undertake any
obligation to release publicly any revisions to these forward-looking statements
to reflect events or circumstances after the date of this press release or to
reflect the occurrence of unanticipated events, except as may be required under
applicable securities laws. These factors include, without limitation, lower
than expected sales in the second quarter of 2004, unexpected changes to the
Company's cash position, general economic, market and business conditions and
other factors beyond the Company's control.
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NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
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FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(In Thousands of US Dollars except share data)
Unaudited
Three months ended
March 31
Note 2004 2003
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Net sales - related parties $ 7,735 $ 2,931
Net sales - third parties 87,700 85,050
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Total net sales 95,435 87,981
Cost of sales 81,139 72,835
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Gross profit 14,296 15,146
Costs and expenses
Selling, general and administrative expenses 6,323 5,471
Research and development expenses 1,042 811
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7,365 6,282
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Income from operations 6,931 8,864
Interest income 75 201
Other income net 1,143 2,067
Equity in income of an affiliated company 92 75
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Income before income taxes and minority interests 8,241 11,207
Income taxes expense (278) (384)
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Income before minority interests 7,963 10,823
Minority interests (576) (613)
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Net income $ 7,387 $ 10,210
==============================
Net income per share
Basic (1) $ 0.18 $ 0.26
=============== ===============
Diluted (1) $ 0.18 $ 0.25
=============== ===============
Weighted average number of shares ('000')
Basic (1) 41,231 39,986
Diluted (1) 41,292 40,477
Note (1): All share and earnings per share data have been adjusted to
give effect to the 3 for 1 stock split effective June 30, 2003 and
the 10 for 1 stock dividend effective November 7, 2003.
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NAM TAI ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
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AS AT March 31, 2004 AND DECEMBER 31, 2003
(In Thousands of US Dollars) Unaudited Audited
March 31 December 31,
2004 2003
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ASSETS
Current assets:
Cash and cash equivalents $ 63,330 $ 61,827
Accounts receivable, net 54,797 62,090
Amount due from a related party 3,162 2,707
Inventories 33,036 27,032
Prepaid expenses and other receivables 9,602 13,126
Income taxes recoverable 5,092 4,922
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Total current assets 169,019 171,704
Investment in an affiliated company 9,947 9,855
Investments, at cost (**) 19,011 16,366
Property, plant and equipment, at cost 132,858 127,930
Less: accumulated depreciation and amortization (52,936) (50,283)
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79,922 77,647
Intangible assets 20,665 20,688
Other assets 1,435 1,435
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Total assets $ 299,999 $ 297,695
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 847 $ 1,879
Long term bank loan - current portion 1,125 1,125
Accounts payable 56,443 55,674
Accrued expenses and other payables 10,770 13,633
Dividend payable 4,948 2,062
Income taxes payable 745 530
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Total current liabilities 74,878 74,903
Long-term bank loan - non-current portion 1,406 1,688
Deferred income taxes 78 78
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Total liabilities 76,362 76,669
Minority interests 4,080 3,908
Shareholders' equity:
Common shares 412 412
Additional paid-in capital 206,845 206,845
Retained earnings 12,302 9,863
Accumulated other comprehensive loss (Note 1) (2) (2)
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Total shareholders' equity 219,557 217,118
Total liabilities and shareholders' $ 299,999 $ 297,695
equity ===================================
Note: (**) The closing price for our 3.69% equity interest or 95.52 million
promoter's shares in TCL Corporation on April 30, 2004 was $0.82
(RMB6.76) per share, the market value is estimated to be
approximately $78.3 million.
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NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(In Thousands of US Dollars)
Unaudited
Three months ended
March 31
2004 2003
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 7,387 $ 10,210
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization of property, plant and equipment 3,280 2,869
Amortization of intangible assets 23 -
Net loss (gain) on disposal of property, plant and equipment 31 (209)
Compensation cost on partial disposal of a subsidiary - 509
Equity in income of an affiliated company (92) (75)
Minority interests 576 613
Changes in current assets and liabilities, net of effects of acquisition and
disposal:
Decrease (increase) in accounts receivable 7,293 (6,224)
Increase in amount due from a related party (455) (806)
Increase in inventories (6,004) (12,913)
Decrease (increase) in prepaid expenses and other receivables 890 (5,272)
Increase in income taxes recoverable (170) (97)
(Decrease) increase in notes payable (1,032) 1,045
Increase in accounts payable 769 15,357
Decrease in accrued expenses and other payables (2,863) (1,819)
Increase in income taxes payable 215 364
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Total adjustments 2,461 (6,658)
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Net cash provided by operating activities $ 9,848 $ 3,552
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment $ (5,607) $ (4,218)
Acquisition of an affiliated company - (10,000)
Acquisition of long term investment (11) (384)
Proceed from partial disposal of a subsidiary - 160
Proceeds from disposal of property, plant and equipment 21 2,327
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Net cash used in investing activities $ (5,597) $ (12,115)
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CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid $ (2,466) $ (1,442)
Repayment of bank loan (282) (13,141)
Proceeds from shares issued on exercise of options and warrants - 1,783
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Net cash used in financing activities $ (2,748) $ (12,800)
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Foreign currency translation adjustments - -
-------------------------------
Net increase (decrease) in cash and cash equivalents 1,503 (21,363)
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Cash and cash equivalents at beginning of period 61,827 82,477
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Cash and cash equivalents at end of period $ 63,330 $ 61,114
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NAM TAI ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(In Thousands of US Dollars)
1. Accumulated other comprehensive income represents foreign currency
translation adjustments. The comprehensive income of the Company was $7,387
and $10,210 for the three months ended March 31, 2004 and March 31, 2003,
respectively.
2. Business segment information - The Company operates primarily in two
segments, the Consumer Electronic Products ("CEP") segment and the LCD
Panels and Transformers ("LPT") segment.
Unaudited
Three months ended
March 31
2004 2003
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NET SALES :
- CEP $ 84,349 $ 77,581
- LPT 11,086 10,400
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Total net sales $ 95,435 $ 87,981
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NET INCOME :
- CEP $ 6,702 $ 10,032
- LPT 685 178
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Total net income $ 7,387 $ 10,210
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Unaudited Audited
March 31, Dec. 31,
2004 2003
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IDENTIFIABLE ASSETS BY SEGMENT:
- CEP $ 251,237 $ 248,165
- LPT 48,762 49,530
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Total assets $ 299,999 $ 297,695
===============================
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3. A summary of the net sales, net income and long-lived assets by geographic
areas is as follows:
Unaudited
Three months ended
March 31
2004 2003
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NET SALES FROM OPERATIONS WITHIN:
- Hong Kong and Macao:
Unaffiliated customers $ 11,086 $ 84,386
Related party - 2,931
Intercompany sales 106 155
- PRC, excluding Hong Kong and Macao:
Unaffiliated customers 76,614 664
Related party 7,735 -
Intercompany sales 2,682 73,955
- Intercompany eliminations (2,788) (74,110)
--------------------------------
Total net sales $ 95,435 $ 87,981
================================
NET INCOME WITHIN:
- PRC, excluding Hong Kong & Macao $ 6,388 $ 8,547
- Macao 258 -
- Hong Kong 741 1,663
--------------------------------
Total net income $ 7,387 $ 10,210
================================
Unaudited Audited
March 31, Dec. 31,
2004 2003
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LONG-LIVED ASSETS WITHIN :
- PRC, excluding Hong Kong & Macao $ 61,900 $ 59,399
- Macao 168 180
- Hong Kong 17,854 18,068
--------------------------------
Total long-lived assets $ 79,922 $ 77,647
================================
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