[NAM TAI LOGO] 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 64%, Net Income Up 87%, EPS Up 78% to $0.32 vs Q1 2004
VANCOUVER, CANADA -- May 3, 2005 -- Nam Tai Electronics, Inc. ("Nam Tai" or the
"Company") (NYSE Symbol: NTE) announced unaudited results for the first quarter
ended March 31, 2005.
KEY HIGHLIGHTS
(In thousands of US Dollars, except per share data and as otherwise stated)
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Quarterly Results
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Q1/05 Q1/04 YoY(%)
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Net sales 156,923 95,435 64.4
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Gross Profit 18,417 14,296 28.8
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% of sales 11.7% 15.0%
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Income from operations 9,734 6,931 40.4
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% of sales 6.2% 7.3%
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per share(diluted) $0.23 $0.17 35.3
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Net income (a) (b) 13,806 7,387 86.9
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% of sales 8.8% 7.7%
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Basic earnings per share $0.32 $0.18 77.8
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Diluted earnings per share $0.32 $0.18 77.8
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Weighted average number of shares ('000)
Basic 42,675 41,231 -
Diluted 42,898 41,292 -
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Notes:
(a) Included in net income is other income consisted of $5.9 million gained from
the partial disposal of the Company's interest in a subsidiary listed in
Hong Kong, compared to $1.4 million dividend income from TCL Mobile
Communication Company Limited in 2004.
(b) The Company has also incurred a one -time charge of $130,000 for the
restructuring of its operations.
Nam Tai is pleased to announce another all time quarterly sales record. Sales
growth was driven mainly by key components sub-assemblies, such as CMOS image
sensor modules for cellular phones with built in camera function and flexible
printed circuit board ("FPC") sub-assemblies. Net sales, and the proforma
operating earnings per share exceeds and is within our guidance respectively. We
also diversified our customer and product base. Most importantly, we believe our
growth potential has enhanced, as we commenced operations, ahead of schedule, in
our expanded production facilities.
The expansion of the Company's key components sub-assemblies business,
especially the FPC sub-assemblies business, has been very successful. As a
result, the gross profit margin was 11.7% compared
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with sales, as expected. However, the gross profit has grown 28.8% compared with
the first quarter of 2004
"Our performance in the first quarter provides a good momentum for our business
this year. We shall continue to expand our business and strive to further
enhance our profitability", said Mr. Joseph Li, CEO of Nam Tai, "The new
production facilities of Nam Tai have commenced operation. All key financial
performance indicators show improvement and the Company is well-positioned to
capture new business opportunities. The Company has already announced several
new business opportunities. We look forward to achieving a new record sales and
milestone in the second quarter of 2005. I would also like to thank the
management team of our subsidiaries, especially Nam Tai Electronic & Electrical
Products Limited ("NTEEP"), for their magnificent contribution after NTEEP's
listing in Hong Kong."
The Company is working towards full compliance with the relevant sections of the
Sarbanes-Oxley Act as scheduled. To further strengthen the management of NTEEP,
the Company is proposing to inject Namtek, its software subsidiary, into NTEEP
in exchange for shares of NTEEP. After completion of the transaction, the
ownership of the Company in NTEEP will increase from 71.25% to 72.06%. The
Company will make a profit of approximately $20 million on this transaction at
the company level. Such profit, however, will be eliminated upon consolidation
at the group level under accounting principles.
Company Outlook
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Based on current market situation and orders on hand, the Company is pleased to
provide the following business projection for the second quarter of 2005.
(In millions of US Dollars, except for earnings per share)
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2Q 2005 2Q 2004 2Q 2005 1Q 2005
(Estimated) (Actual) vs (Actual)
2Q 2004
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Sales $170 - $180 $148 15% - 22% $157
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Pro Forma Earnings per
Share (diluted) (a)(b) $0.28 - $0.32 $0.31 (10)% - 3% $0.23
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Notes:
(a) The pro-forma earnings per share (diluted) is calculated based on income
before income taxes, minority interests and equity in income(loss) of
affiliated companies, less any one-time income or expense.
(b) The diluted earnings per share will be affected by the fluctuation of the
total number of outstanding shares.
Supplementary Information (Unaudited) for the First Quarter of 2005
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1. Quarterly Sales Breakdown
(In Thousands of US Dollars)
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Quarter 2005 2004 YoY(%) YoY(%)
(Quarterly) (Quarterly accumulated)
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1st Quarter 156,923 95,435 64.4 64.4
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2nd Quarter - 147,664
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3rd Quarter - 137,986
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4th Quarter - 152,776
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Total* 156,923 533,861
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*Total sales for 2005 comprise only three months sales, whereas total sales
for 2004 comprise full twelve months sales
Page 2 of 9
2. Net Sales Breakdown by Product Segment
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2005 2004
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Segment 1Q YTD 1Q YTD
(%) (%) (%) (%)
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Consumer Electronics and Communication
Products (a)
27% 27% 29% 29%
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Telecom. Components Assembly:
- Telecom. Components Assembly (b) 64% 64% 58% 58%
- Software Development Services (c) 1% 1% 1% 1%
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Parts & Components:
- LCD Panels (d) 8% 8% 12% 12%
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100% 100% 100% 100%
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Note:
(a) Represents the sales of Nam Tai Electronic & Electrical Products Limited
(b) Represents the sales of Zastron Precision-Tech Limited
(c) Represents the sales of Namtek Software Development Company Limited
(d) Represents the sales of J.I.C. Technology Company Limited
3. Key Highlight of Financial Position
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(unaudited) (audited)
As at March 31 As at December 31
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2005 2004 2004
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Cash on Hand $164.5 million $63.3 million $160.6 million
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Marketable Securities $40.3 million - $41.9 million
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Cash/Current Liabilities 1.47 0.85 1.38
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Current Ratio 2.96 2.26 2.87
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Total Assets/Total Liabilities 3.95 3.93 3.79
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Debtors Turnover 56 days 56 days 62 days
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Inventory Turnover 14 days 37 days 18 days
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Average Payable Period 52 days 64 days 72 days
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First Quarter Results Analyst Conference Call
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The Company will hold a conference call on Tuesday, May 3, 2005 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 and clicking on the
conference call link (under events) or over the phone by dialing (612) 332-0228
just prior to its start time.
Dividends
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The record date for the second quarter dividend of $0.33 per share is June 30,
2005 and the payment date is after July 20, 2005.
Annual General Meeting
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The Company will hold its Annual Shareholders' Meeting at 11:30 a.m. (ET) on
Monday, June 6, 2005 at The Peninsula New York, Tribeca Room, 3rd Fl, 700 Fifth
Avenue at 55th St, New York, NY. The record date for voting is April 22, 2005.
Page 3 of 9
About Nam Tai Electronics, Inc.
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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, FPC sub-assemblies and image sensors modules. 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, personal digital
assistants, electronic dictionaries, calculators, digital camera accessories and
Bluetooth TM wireless headset accessory for use with cellular phones.
Nam Tai has two Hong Kong listed subsidiaries, Nam Tai Electronic & Electrical
Products Limited ("NTEEP") and J.I.C. Technology Company Limited ("JIC") and
their First Quarter Results were announced earlier today in Hong Kong.
Interested investors may go to the website of The Stock Exchange of Hong Kong at
www.hkex.com.hk to obtain the information. The stock code of NTEEP and JIC on
The Stock Exchange of Hong Kong 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 different peak seasons during a year
Forward-Looking Statements
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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 projected pro-forma earnings per share
(diluted) for the second quarter of 2005, 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 2005, 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, 2005 AND 2004
(In Thousands of US Dollars except share data)
Unaudited
Three months ended
March 31
2005 2004
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Net sales - related parties $ 5,105 $ 7,735
Net sales - third parties 151,818 87,700
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Total net sales 156,923 95,435
Cost of sales 138,506 81,139
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Gross profit 18,417 14,296
Costs and expenses
Selling, general and administrative expenses 7,202 6,323
Research and development expenses 1,481 1,042
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8,683 7,365
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Income from operations 9,734 6,931
Interest income 673 75
Gain on partial disposal of subsidiaries 5,870 -
Other (loss) income - net (497) 1,164
Interest expense (82) (21)
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Income before income taxes, minority interests 15,698 8,149
and equity in income of affiliated companies
Income taxes expense (141) (278)
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Income before minority interests 15,557 7,871
Minority interests (1,751) (576)
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Income after minority interests 13,806 7,295
Equity in income of affiliated companies - 92
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Net income $ 13,806 $ 7,387
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Net income per share
Basic $ 0.32 $ 0.18
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Diluted $ 0.32 $ 0.18
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Weighted average number of shares (`000')
Basic 42,675 41,231
Diluted 42,898 41,292
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NAM TAI ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
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AS AT March 31, 2005 AND DECEMBER 31, 2004
(In Thousands of US Dollars) Unaudited Audited
March 31 December 31,
2005 2004
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ASSETS
Current assets:
Cash and cash equivalents $ 164,546 $ 160,649
Marketable securities 40,275 41,906
Accounts receivable, net 93,700 90,362
Amount due from a related party - 66
Inventories 21,544 23,096
Prepaid expenses and other receivables 2,859 12,087
Income taxes recoverable 7,124 6,566
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Total current assets 330,048 334,732
Investment in affiliated companies 3,049 3,049
Property, plant and equipment, at cost 169,337 158,147
Less: accumulated depreciation and amortization (64,421) (60,706)
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104,916 97,441
Deposits for property, plant and equipment 4,657 7,701
Intangible assets 16,267 16,290
Other assets 1,260 1,260
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Total assets $ 460,197 $ 460,473
=========================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 3,158 $ 2,080
Long term bank loan - current portion 3,075 2,875
Accounts payable 75,302 89,570
Accrued expenses and other payables 14,673 16,661
Amount due to a related party 1,116 -
Dividend payable 14,101 5,120
Income taxes payable 171 183
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Total current liabilities 111,596 116,489
Long-term bank loan - non-current portion 5,044 5,163
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Total liabilities 116,640 121,652
Minority interests 39,813 33,768
Shareholders' equity:
Common shares 427 426
Additional paid-in capital 242,700 241,756
Retained earnings 56,029 56,324
Accumulated other comprehensive income (Note 1) 4,588 6,547
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Total shareholders' equity 303,744 305,053
Total liabilities and shareholders' equity $ 460,197 $ 460,473
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NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
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FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(In Thousands of US Dollars)
Unaudited
Three months ended
March 31
2005 2004
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 13,806 $ 7,387
Adjustments to reconcile net income to net cash (used in) provided by operating
activities:
Depreciation and amortization of property, plant and equipment 3,844 3,280
Amortization of intangible assets 23 23
Net (gain) loss on disposal of property, plant and equipment (29) 31
Gain on partial disposal of subsidiaries (5,870) -
Equity in income of an affiliated companies - (92)
Minority interests 1,751 576
Changes in current assets and liabilities, net of effects of acquisition and
disposal:
(Increase) Decrease in accounts receivable (3,338) 7,293
Decrease (Increase) in amount due from a related party 66 (455)
Decrease (Increase) in inventories 1,552 (6,004)
(Increase) decrease in prepaid expenses and other receivables (991) 1,589
Increase in income taxes recoverable (558) (170)
Increase (Decrease) increase in notes payable 1,078 (1,032)
(Decrease) Increase in accounts payable (14,268) 769
Decrease in accrued expenses and other payables (1,988) (2,863)
Increase in amount due to a related party 1,116 -
(Decrease) Increase in income taxes payable (12) 215
Total adjustments (17,624) 3,160
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Net cash (used in) provided by operating activities $ (3,818) $ 10,547
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment $ (11,328) $ (5,607)
Deposits for property, plant and equipment 3,044 (699)
Acquisition of long term investment - (11)
Proceeds from partial disposal of subsidiaries 20,055 -
Proceeds from disposal of property, plant and equipment 38 21
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Net cash provided by (used in) investing activities $ 11,809 $ (6,296)
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CASH FLOWS FROM FINANCING ACTIVITIES
Cash dividends paid $ (5,120) $ (2,466)
Proceeds from bank loan 800 -
Repayment of bank loan (719) (282)
Proceeds from shares issued on exercise of options and warrants 945 -
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Net cash used in financing activities $ (4,094) $ (2,748)
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Net increase in cash and cash equivalents 3,897 1,503
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Cash and cash equivalents at beginning of period 160,649 61,827
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Cash and cash equivalents at end of period $ 164,546 $ 63,330
===========================
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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, 2005 AND 2004
(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 $11,847 (including an unrealized
loss on marketable securities of US$1,959 in relation to TCL Communication
Technology Holdings Limited and TCL Corporation) and $7,387 for the three
months ended March 31, 2005 and March 31, 2004, respectively.
2. Business segment information - The Company operates primarily in three
segments, the Consumer Electronics and Communication Products ("CECP")
segment, Telecommunication Components Assembly ("TCA") segment and the LCD
Panels ("LCDP") segment.
Unaudited
Three months ended
March 31
2005 2004
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NET SALES :
- CECP $ 42,028 $ 27,478
- TCA 102,622 56,871
- LCDP 12,273 11,086
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Total net sales $ 156,923 $ 95,435
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NET INCOME :
- CECP $ 3,882 $ 3,239
- TCA 9,315 3,463
- LCDP 609 685
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Total net income $ 13,806 $ 7,387
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Unaudited Audited
March 31, Dec. 31,
2005 2004
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IDENTIFIABLE ASSETS BY SEGMENT:
- CECP $ 138,539 $ 134,473
- TCA 267,881 274,664
- LCDP 53,777 51,336
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Total assets $ 460,197 $ 460,473
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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
2005 2004
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NET SALES FROM OPERATIONS WITHIN:
- Hong Kong and Macao:
Unaffiliated customers $ 12,273 $ 11,086
Related party - -
Intercompany sales 186 106
- PRC, excluding Hong Kong and Macao:
Unaffiliated customers 144,650 76,614
Related party - 7,735
Intercompany sales 5,105 2,682
- Intercompany eliminations (5,291) (2,788)
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Total net sales $ 156,923 $ 95,435
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NET INCOME WITHIN:
- PRC, excluding Hong Kong & Macao $ 5,023 $ 6,388
- Macao 5,514 258
- Hong Kong 3,269 741
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Total net income $ 13,806 $ 7,387
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Unaudited Audited
March 31, Dec. 31,
2005 2004
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LONG-LIVED ASSETS WITHIN :
- PRC, excluding Hong Kong & Macao $ 92,131 $ 84,453
- Macao 130 134
- Hong Kong 12,655 12,854
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Total long-lived assets $ 104,916 $ 97,441
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