MACAO, China, Aug. 4 /PRNewswire-FirstCall/ -- Nam Tai Electronics, Inc.
('Nam Tai' or the 'Company') (NYSE: NTE) today announced its unaudited results
for the second quarter ended June 30, 2008.
KEY HIGHLIGHTS
(In thousands of US Dollars, except per share data, percentages and as
otherwise stated)
Quarterly Results Half-Year Results
Q2 2008 Q2 2007 YoY(%) 1H2008 1H2007 YoY(%)
Net sales $146,168 $197,830 (26.1) $293,297 $389,401 (24.7)
Gross profit $20,762 $22,745 (8.7) $40,292 $39,946 0.9
% of sales 14.2% 11.5% - 13.7% 10.3% -
Operating income $8,608 $11,834 (27.3) $16,420 $19,051 (13.8)
% of sales 5.9% 6.0% - 5.6% 4.9% -
per share
(diluted) $0.19 $0.26 (26.9) $0.37 $0.43 (14.0)
Net income $11,804 $38,805 (69.6) $40,170 $47,204 (14.9)
% of sales 8.1% 19.6% - 13.7% 12.1% -
Basic earnings
per share $0.26 $0.87 (70.1) $0.90 $1.06 (15.1)
Diluted earnings
per share $0.26 $0.87 (70.1) $0.90 $1.05 (14.3)
Weighted average
number of
shares ('000')
Basic 44,804 44,804 - 44,804 44,360 -
Diluted 44,811 44,806 - 44,807 44,805 -
In addition to disclosing results determined in accordance with accounting
principles generally accepted in the United States ('US GAAP') as set forth in
the table above, management utilizes a measure of operating income, net income
and earnings per share on a non-GAAP basis that excludes certain income and
expenses to better assess operating performance. Those non-GAAP financial
measures exclude certain items, such as share-based compensation expenses and
infrequent or unusual items such as gain on disposal of subsidiaries' shares
and gain on disposal of marketable securities. By disclosing the 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 financial data prepared in accordance with US GAAP as measures
of our operating results or liquidity. Users of this financial information
should consider the types of events and transactions for which adjustments
have been made. See the table below for a reconciliation of non-GAAP amounts
to amounts reported under US GAAP.
GAAP TO NON-GAAP RECONCILIATION
(In millions of US Dollars, except for per share (diluted) and numbers of
shares)
Three months ended
June 30,
2008 2007
per share per share
millions (diluted) millions (diluted)
GAAP Operating Income $8.6 $0.19 $11.8 $0.26
Add back:
-share-based compensation
expenses(a) 0.2 0.01 0.2 0.01
Non-GAAP Operating Income $8.8 $0.20 $12.0 $0.27
GAAP Net Income $11.8 $0.26 $38.8 $0.87
Add back/(Less):
-share-based compensation
expenses(a) 0.2 0.01 0.2 0.01
-gain on sale of
subsidiaries' shares (b) - - (0.4) (0.01)
-other income recovered
from Tele-Art Inc. (in
liquidation)(c) (2.9) (0.07) - -
-gain on disposal of
marketable securities - - (28.0) (0.63)
Non-GAAP Net Income $9.1 $0.20 $10.6 $0.24
Weighted average number of
shares - diluted ('000) 44,811 44,806
Six months ended
June 30,
2008 2007
per share per share
millions (diluted) millions (diluted)
GAAP Operating Income $16.4 $0.37 $19.1 $0.42
Add back:
-share-based compensation
expenses(a) 1.2 0.03 0.3 0.01
Non-GAAP Operating Income $17.6 $0.40 $19.4 $0.43
GAAP Net Income $40.2 $0.90 $47.2 $1.06
Add back/(Less):
-share-based compensation
expenses(a) 1.2 0.03 0.3 0.01
-gain on sale of
subsidiaries' shares (b) (20.2) (0.45) (0.4) (0.01)
-other income recovered
from Tele-Art Inc. (in
liquidation)(c) (2.9) (0.07) - -
-gain on disposal of
marketable securities - - (28.0) (0.63)
Non-GAAP Net Income $18.3 $0.41 $19.1 $0.43
Weighted average number of
shares - diluted ('000) 44,807 44,805
Note:
(a) The share-based compensation expenses included approximately $0.2
million attributable to options to purchase 75,000 shares granted in the
second quarter of 2008 to non-employee directors in accordance with the
Company's practice of making annual option grants to its non-employee
directors upon their election for the ensuing year and approximately $1.0
million principally attributable to options to purchase approximately 20
million shares granted by the Company's Hong Kong Stock Exchange- listed
subsidiary, Nam Tai Electronic & Electrical Products Limited ('NTEEP')(Stock
Code : 2633), to certain of its executive directors and employees in the
first quarter of 2008.
(b) On March 4, 2008, Nam Tai completed the sale of its entire equity
interest in J.I.C. Technology Company Limited ('JIC'), a Hong Kong Stock
Exchange listed subsidiary (Stock Code: 00987), to an independent third party.
In this transaction, Nam Tai sold 572,594,978 shares of JIC, representing
74.99% of its outstanding share capital for cash of approximately $51 million,
which resulted in a gain on disposal of approximately $20 million.
(c) A total amount of approximately $2.9 million of other income in the
Company's financial statements for the second quarter of 2008. This amount
represents Nam Tai's share of proceeds realized from the disposal for the
account of Tele-Art, Inc.'s liquidator of 477,319 Nam Tai shares owned by
Tele-Art, Inc. (in liquidation)('Tele-Art') and was paid in settlement of
amounts previously funded by Nam Tai in connection with Tele-Art's liquidation
and in partial satisfaction of judgments in favor of Nam Tai against Tele-Art.
SECOND QUARTER REVIEW
The business environment in Nam Tai's product sectors remains difficult
and extremely competitive. Net sales in the second quarter of 2008 were $146.2
million, a decrease of 26.1% as compared to the sales of $197.8 million in the
second quarter of 2007, mainly as a consequence of the continuing decline in
business from the Company's telecommunication components assembly ('TCA')
segment. Net sales in the TCA segment for the second quarter of 2008
decreased by 48.0% compared to the same quarter of 2007. Our TCA segment is
primarily dependent on the mobile phone market. The Company suffered another
substantial drop in sales volume of its devices used in mobile phones, a trend
Nam Tai began experiencing in 2007 and which has continued and accelerated as
a result of declining demand experienced in the mobile phone market and
persistent pressure to lower unit prices. The challenging environment in the
TCA segment is expected to continue and may increase in the coming quarters.
Sales of products in our liquid crystal display product ('LCDP') segment and
sales from our consumer electronics and communication products ('CECP')
segment also dropped by 6.1% and 3.1% respectively, during the second quarter
of 2008 as compared to sales of the corresponding quarter of 2007. The
decrease in sales in our LCDP segment was mainly a consequence of the drop of
sales of our LCD modules products. Sales in our CECP segment were affected by
a decrease in sales of mobile phone accessories of approximately 28% from
comparable sales in the second quarter of 2007, offset by the increase in
sales of our home entertainment devices amounting to approximately 22% from
2007 second quarter sales.
The Company's gross profit margin in the second quarter of 2008 improved
by approximately 2.7 %, to 14.2% in the second quarter of 2008 compared to
11.5% in the second quarter of 2007. Management attributes this increase in
gross profit margins to it's program selectivity, with strong emphasis on
profitability, and the effect of efforts to improve manufacturing
efficiencies. We will continue our efforts in improving manufacturing
efficiencies, broadening our product offerings and diversifying our customer
base which we expect will help to manage operations in the ongoing tough
business environment. Gross profit in the second quarter of 2008 was $20.8
million, a decrease of 8.7% as compared to $22.7 million in the second quarter
of 2007, primarily resulting from the decline in 2008 sales.
Operating income in the second quarter of 2008 was $8.6 million, or $0.19
per share (diluted), compared to operating income of $11.8 million, or $0.26
per share (diluted) in the second quarter of 2007. Net income in the second
quarter of 2008 was $11.8 million, compared to net income of $38.8 million (of
which, approximately $28.0 million resulted from a net gain on disposal of
marketable securities) in the second quarter of 2007. Basic and diluted
earnings per share in the second quarter of 2008 were $0.26 per share,
compared to $0.87 in the second quarter of 2007.
For the six months ended June 30, 2008, Nam Tai's net sales were $293.3
million, a decrease of 24.7% as compared to $389.4 million in the same period
last year. Gross profit was $40.3 million, an increase of 0.9% as compared to
$40.0 million in the same period last year. Operating income for the first six
months in 2008 decreased 13.8% to $16.4 million, or $0.37 per share (diluted),
compared to $19.1 million, or $0.43 per share (diluted), in the same period
last year. Net income was $40.2 million, or $0.90 per share (diluted), a
decrease of 14.9% as compared to $47.2 million or $1.05 per share (diluted) in
the same period last year.
The Company's financial position remains strong and net cash provided by
operating activities in the second quarter was $30.8 million. The Company
ended the quarter with $271.9 million cash and cash equivalents on June 30,
2008 even after capital expenditures of $5.8 million and cash dividends of
$9.8 million paid to shareholders of the Company and $6.0 million paid to
minority shareholders of NTEEP.
NON-GAAP FINANCIAL INFORMATION
Non-GAAP operating income for the second quarter of 2008 was $8.8 million,
or $0.20 per share (diluted), compared to non-GAAP operating income of $12.0
million, or $0.27 per share (diluted), in the second quarter of 2007. Non-GAAP
net income for the second quarter of 2008 decreased by 14.2% over the second
quarter of 2007 to $9.1 million, or $0.20 per share (diluted), compared to
$10.6 million, or $0.24 per share (diluted), in the second quarter of 2007.
Non-GAAP operating income for the first six months in 2008 was $17.6
million, or $0.40 per share (diluted), compared to non-GAAP operating income
of $19.4 million, or $0.43 per share (diluted) for the same period last year.
Non-GAAP net income for the first six months in 2008 was $18.3 million or
$0.41 per share (diluted), a decrease of 4.2% as compared to $19.1 million, or
$0.43 per share (diluted), for the same period last year.
COMPANY OUTLOOK
Recent global adverse economic conditions (which, we believe, have been
primarily driven by the sub-prime crisis in the US) aggravated the Company's
results in the past quarter and may exacerbate the difficult business
environment we currently face and could result in negative effects to our
results of operations over the next several quarters. Additionally, we also
face issues such as the continuing appreciation of the exchange rate of the
renminbi to the US dollar, the effects of changing tax and labor laws in the
People's Republic of China ('PRC'), shortages of electricity supply and
increases in overhead expenses resulting from inflation.
To respond to the challenges surfacing from the current business
environment, management has continued to focus efforts to optimize operating
efficiencies by realigning production capacity to higher margin product
offerings and has sought to diversify Nam Tai's customer base. Management
believes that Nam Tai has begun to realize limited benefits from the Company's
simpler organizational structure implemented at the beginning of 2008, which
management believes has fostered, and will continue to, foster a more
efficient and effective exchange of know-how and technology among our group
companies, reduced overhead costs and facilitated stronger management
controls.
During the second quarter of 2008, the foundation of the first of the
Company's planned new factories in Wuxi in the Jiangsu Province of China was
completed and the Company had, according to its schedule, selected a
contractor for the mechanical and electrical construction required for the
expansion project. Management is optimistic that Nam Tai will be in a
position to begin mass production at the new Wuxi facility in early to mid-
2009.
SUPPLEMENTARY INFORMATION (UNAUDITED) IN THE SECOND QUARTER OF 2008
1. Quarterly Sales Breakdown
(In thousands of US Dollars, except percentage information)
Quarter YoY(%)
YoY(%) (Quarterly
2008 2007 (Quarterly) accumulated)
1st Quarter 147,129 191,571 (23.2) (23.2)
2nd Quarter 146,168 197,830 (26.1) (24.7)
3rd Quarter - 204,485 - -
4th Quarter - 186,936 - -
Total 293,297 780,822
2. Breakdown of Net Sales by Product Segment (as a percentage of Total Net
Sales)
2008 2007
Segments Q2 YTD Q2 YTD
(%) (%) (%) (%)
Consumer Electronic and
Communication Products 50% 49% 38% 33%
Telecommunication Component 36% 38% 51% 57%
Assembly
LCD Products 14% 13% 11% 10%
100% 100% 100% 100%
3. Key Highlights of Financial Position
As at June 30, As at December 31,
2008 2007 2007
Cash on hand (a) $271.9 million $268.3 million $272.5 million
Ratio of cash (a) to
current liabilities 2.28 1.79 1.87
Current ratio 3.29 2.74 2.83
Ratio of total assets
to total liabilities 4.37 3.61 3.70
Return on equity 23.6% 28.9% 21.5%
Ratio of total
liabilities to equity 0.34 0.45 0.45
Debtors turnover 50 days 48 days 45 days
Inventory turnover 16 days 19 days 17 days
Average payable period 56 days 58 days 56 days
Note: (a) Includes cash equivalents.
4. Claims against Tele-Art
We reported a total of approximately $2.9 million as other income in our
financial statements for the second quarter of 2008. This amount represents
the Company's share of proceeds realized from the sales on behalf of Tele-
Art's liquidator of 477,319 Nam Tai shares for the benefit of unsecured
creditors of Tele-Art and was paid to Nam Tai in settlement of amounts
previously funded by Nam Tai in connection with Tele-Art's liquidation
proceedings and in partial satisfaction of judgments in favor of Nam Tai
against Tele-Art. Total net proceeds from sales of such 477,319 shares were
approximately $4.9 million, which together with approximately $300,000 in cash
dividends that had accrued on the shares prior to their sale, were, in
addition to the aforementioned payment to the Company, used as follows
(amounts are approximate):
-- $200,000 to satisfy claims of unsecured creditors of Tele-Art other
than Nam Tai;
-- $400,000 to satisfy the claims of Tele-Art's former liquidator;
-- $600,000 in payment of professional fees and expenses, including
expenses relating to the sale of the shares, incurred through June 30, 2008;
and
The balance of the sale proceeds, amounting $1,100,000 at June 30, 2008,
have been reserved for on-going legal and professional costs expected in
connection with efforts to locate and recover additional assets of Tele-Art's
liquidation estate.
5. Increase the equity interest in NTEEP
At March 31, 2008, Nam Tai owned 645,229,470 shares of Nam Tai Electronic
& Electrical Products Limited ('NTEEP'), its operating subsidiary that is
listed on the Hong Kong Stock Exchange (Stock Code: 2633). During the period
from April 1 to June 30, 2008, the Company made open-market purchases of
11,116,000 shares of NTEEP at prices per share ranging from HK$1.47 to HK$1.53
(or approximately $0.188 to $0.196), increasing the Company's equity interest
in NTEEP's outstanding share capital by 1.26%, from 73.18% to 74.44%, at June
30, 2008. From July 1 through July 25, 2008, Nam Tai made purchases of an
additional 3,870,000 shares of NTEEP increasing its equity interest in NTEEP
to 74.88%, which is the maximum level permitted by the Hong Kong Stock
Exchange in order to allow a minimum of 25% public float pursuant to the Rules
governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited.
SECOND QUARTER RESULTS ANALYST CONFERENCE CALL
The Company will hold a conference call on Monday, August 4, 2008 at 8:00
a.m. Eastern Time for analysts to discuss the second quarter results with Nam
Tai's 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) 332-0107 just prior to its start time.
DIVIDENDS
The second quarter dividend of $0.22 per share was paid on or about July
21, 2008. The record date for the third quarter dividend of $0.22 per share is
September 30, 2008 and the payment date is on or before October 21, 2008. The
payment dates for the fourth quarter is scheduled to be on or before January
21, 2009.
The schedule for quarterly dividends paid and payable for fiscal year 2008
are as follows:
Quarterly Dividend
Payment Record Date Scheduled Payment Date (per share)
Q1/08 March 31, 2008 Paid on or before April 21, 2008 $0.22
Q2/08 June 30, 2008 Paid on or before July 21, 2008 $0.22
Q3/08 September 30, 2008 On or before October 21, 2008 $0.22
Q4/08 December 31, 2008 On or before January 21, 2009 $0.22
Full Year 2008 $0.88
FORWARD-LOOKING STATEMENTS AND FACTORS THAT COULD CAUSE OUR SHARE PRICE TO
DECLINE
Statements in this press release, such as management's assessment of the
effects of management's efforts to improve Nam Tai's profitability and profit
margins, benefits expected from the Company's internal reorganization that was
completed at the end of 2007 and management's estimates of when Nam Tai will
be in a position to begin mass production at its new facility in Wuxi,
Jiangsu Province, PRC, 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 management's
views with respect to future events and may not actually occur during the
periods indicated or at all and are not a guarantee of Nam Tai's 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 effects of management's efforts to improve Nam Tai's
profitability have resulted or will result in improved profitability or profit
margins or overcome the perceived onset of adverse global economic conditions
generally or the ongoing weakness in the mobile phone supply chain,
specifically, increasing taxes and labor costs from new tax and labor
legislation in the PRC, whether material additional benefits expected from the
Company's internal reorganization that was completed at the end of 2007 will
actually be realized, whether management's estimates of when construction of
Nam Tai's new manufacturing faciliy in Wuxi, Jiangsu Province, PRC will be
available for production will prove true, and whether revenues expected when
production at Nam Tai's new Wuxi facility commences will materialize will
depend upon future sales orders and on Nam Tai's actual ability to contain
manufacturing costs and the level of capital expenditures required for each of
the planned expansion projects. Product orders and Nam Tai's growth, operating
income, available cash, cash flows and levels of capital expenditures 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, particularly in the mobile phone market that places
constant pressure on the Company to reduce unit prices; continuing competitive
pressures that adversely affect its profit margins; its operating results
fluctuating and lacking predictability; risks relating to its doing business
in the PRC such as arising from changes in governmental policies, trade
regulation, currency exchange rates, particularly from the appreciation of
the renminbi to the U.S. dollar which has occurred since June 2005 and has
shown no signs of abating, inflation in the PRC; 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 of the products manufactured by Nam Tai;
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; the
availability and increasing costs of materials and other components needed to
manufacture its products; 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 needed for completion of its
expansion projects or continue existing operations, other unexpected project
delays or unanticipated cost increases; risks of expanding into new areas of
the PRC where Nam Tai's has not yet conducted business, 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 the PRC 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, including an
exacerbation of the current global economic weaknesses that continue adversely
affecting, or further reduce, demand for Nam Tai's products. In addition,
factors, among others, that could cause the market price of our shares to
decline in the future could include further decreases in our revenues from
those we reported in earlier periods, the operating results or those of our
competitors or customers to meet the expectations of public market analysts
and investors who follow the electronics manufacturing services, or EMS,
industry, or one or more of the factors discussed in 'Item 3. Key Information
- Risk Factors' in our Annual Report on Form 20-F for the year ended December
31, 2007 as filed on March 17, 2008 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 reports on
Form 20-F, copies of which may be obtained from Nam Tai's website at
http://www.namtai.com.
All information in this press release is as of August 1, 2008 in Macao,
Special Administrative Region of the People's Republic of China. Nam Tai does
not undertake any duty, and should not be expected, 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 subassemblies, including
LCD panels, LCD modules, RF modules, DAB modules, FPC subassemblies and
image-sensor modules and PCBAs for headsets containing Bluetooth(R) wireless
technology.(1) These components are used in numerous electronic products,
including mobile phones, laptop computers, digital cameras, electronic toys,
handheld video game devices, and entertainment devices. We also manufacture
finished products, including mobile phone accessories, home entertainment
products and educational products. We assist our OEM customers in the design
and development of their products and furnish full turnkey manufacturing
services that utilize advanced manufacturing processes and production
technologies.
Nam Tai's operations are conducted by its subsidiary, Nam Tai Electronic &
Electrical Products Limited ('NTEEP'), a Hong Kong Stock Exchange-listed
company, in which Nam Tai owns approximately 74.88% of the outstanding share
capital. In addition to reports that Nam Tai files with the SEC, which may
accessed through the SEC's EDGAR database at http://www.sec.gov, interested
investors may review the website of The Stock Exchange of Hong Kong at
www.hkex.com.hk to obtain information that NTEEP is required to file under
applicable rules of the Hong Kong Stock Exchange. The stock code of NTEEP on
The Stock Exchange of Hong Kong is 2633. Investors are reminded to exercise
caution when assessing information from the Hong Kong Stock Exchange and not
to deal with the shares of Nam Tai based solely upon reliance on such
information.
(1) The Bluetooth(R) word mark and logos are owned by the Bluetooth SIG,
Inc. and any use of such marks by Nam Tai is under license.
NAM TAI ELECTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED JUNE 30, 2008 AND 2007
(In Thousands of US Dollars except share and per share data)
Unaudited Unaudited
Three months ended Six months ended
June 30 June 30
2008 2007 2008 2007
Net sales $146,168 $197,830 $293,297 $389,401
Cost of sales 125,406 175,085 253,005 349,455
Gross profit 20,762 22,745 40,292 39,946
Costs and expenses
Selling, general and
administrative expenses 9,480 8,486 18,831 16,293
Research and development
expenses 2,674 2,425 5,041 4,602
12,154 10,911 23,872 20,895
Operating Income 8,608 11,834 16,420 19,051
Other income, net 5,101 789 6,487 323
Gain on disposal of marketable
securities - 43,815 - 43,815
Gain on sales of subsidiaries'
shares - 390 20,206 390
Interest income 1,575 2,303 3,290 4,474
Interest expense (69) (109) (143) (210)
Income before income taxes
and minority interests 15,215 59,022 46,260 67,843
Income taxes (1,242) (5,502) (1,501) (3,914)
Income before minority interests 13,973 53,520 44,759 63,929
Minority interests (2,169) (14,715) (4,589) (16,725)
Net income $11,804 $38,805 $40,170 $47,204
Earnings per share
Basic $0.26 $0.87 $0.90 $1.06
Diluted $0.26 $0.87 $0.90 $1.05
Weighted average number of
shares ('000')
Basic 44,804 44,804 44,804 44,360
Diluted 44,811 44,806 44,807 44,805
NAM TAI ELECTRONICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS AT JUNE 30, 2008 AND DECEMBER 31, 2007
(In Thousands of US Dollars)
Unaudited Audited
June 30 December 31
2008 2007
ASSETS (Note)
Current assets:
Cash and cash equivalents $271,854 $272,459
Accounts receivable, net 81,095 95,802
Entrusted loan receivable (Note 1) 8,166 -
Inventories 22,257 32,356
Prepaid expenses and other receivables 3,717 5,803
Income tax recoverable 3,544 5,483
Deferred tax assets - current 568 54
Total current assets 391,201 411,957
Property, plant and equipment, net 90,668 94,669
Land use right 13,742 3,930
Deposits for property, plant and equipment 1,280 536
Prepayment for land use right - 9,019
Goodwill 20,296 20,296
Deferred tax assets 3,426 3,192
Other assets 1,219 1,219
Total assets $521,832 $544,818
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $2,571 $4,580
Long-term bank loans - current portion - 1,990
Entrusted loan payable (Note 1) 8,166 -
Accounts payable 77,700 107,326
Accrued expenses and other payables 19,534 21,690
Dividend payable 9,857 9,509
Income tax payable 1,157 556
Total current liabilities 118,985 145,651
Long-term bank loans - non-current portion - 1,558
Deferred tax liabilities 379 -
Total liabilities 119,364 147,209
Minority interests 50,919 67,428
Shareholders' equity:
Common shares 448 448
Additional paid-in capital 282,807 281,895
Retained earnings 68,302 47,846
Accumulated other comprehensive income (Note 2) (8) (8)
Total shareholders' equity 351,549 330,181
Total liabilities and shareholders' equity $521,832 $544,818
Note: Information extracted from the audited financial statements
included in the 2007 Form 20-F of the Company filed with the Securities and
Exchange Commission on March 17, 2008.
NAM TAI ELECTRONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE PERIODS ENDED JUNE 30 2008 AND 2007
(In Thousands of US Dollars)
Unaudited Unaudited
Three months ended Six months ended
June 30 June 30
2008 2007 2008 2007
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $11,804 $38,805 $40,170 $47,204
Adjustments to
reconcile net income
to net cash provided
by operating activities:
Depreciation and
amortization of property,
plant and equipment and
land use right 5,616 5,289 11,311 10,313
Net (gain) loss on disposal
of property, plant and
equipment (2) 37 2 44
Dividend withheld (305) - (305) -
Gain on disposal of
marketable securities - (43,815) - (43,815)
Gain on sales of
subsidiaries' sales - (390) (20,206) (390)
Share-based compensation
expenses 158 230 1,158 317
Minority interests 2,169 14,715 4,589 16,725
Deferred income taxes 126 112 (369) (1,871)
Unrealized exchange (gain)
loss (1,066) 93 (3,771) (58)
Changes in current assets
and liabilities:
Decrease in accounts
receivable 8,717 6,802 14,556 16,009
Decrease (increase) in
inventories 6,230 (5,773) 10,099 (5,963)
Decrease (increase) in
prepaid expenses and
other receivables 545 (33) 2,005 (291)
Decrease in income taxes
recoverable 23 3,019 1,895 2,821
(Decrease) increase in
notes payable (1,288) 4,671 (2,009) 5,577
(Decrease) increase in
accounts payable (634) 3,338 (29,626) (14,678)
(Decrease) increase in
accrued expenses and
other payables (1,689) (141) (2,249) 1,732
Increase in income tax
payable 362 1,766 755 1,766
Total adjustments 18,962 (10,080) (12,165) (11,762)
Net cash provided by
operating activities $30,766 $28,725 $28,005 $35,442
CASH FLOWS FROM INVESTING
ACTIVITIES
Net cash (outflow)
inflow from disposal
of subsidiaries (104) - 6,671 -
Purchase of property,
plant and equipment (5,780) (5,672) (7,668) (7,720)
Increase in deposits for
purchase of property,
plant and equipment (1,258) (481) (949) (324)
Increase in prepayment for
purchase of land - (731) (663) (736)
Increase in entrusted loan
receivable (8,166) - (8,166) -
Acquisition of additional
shares in subsidiaries (2,030) (13,808) (2,030) (13,808)
Proceeds from disposal
of property, plant and
equipment 22 14 30 14
Proceeds from disposal of
marketable securities - 53,914 - 53,914
Proceeds from sales of
subsidiaries shares - 7,287 - 7,287
Net cash (used in) provided
by investing activities $(17,316) $40,523 $(12,775) $38,627
CASH FLOWS FROM FINANCING
ACTIVITIES
Cash dividends paid $(15,815) $(9,409) $(25,124) $(26,048)
Proceeds from entrusted
loan 8,166 - 8,166 -
Repayment of bank loans (2,225) (437) (2,648) (875)
Net cash used in
financing activities $(9,874) $(9,846) $(19,606) $(26,923)
Net increase in cash and
cash equivalents 3,576 59,402 (4,376) 47,146
Cash and cash equivalents
at beginning of period 267,212 208,979 272,459 221,084
Effect of exchange rate
changes on cash and cash
equivalents 1,066 (93) 3,771 58
Cash and cash equivalents
at end of period $271,854 $268,288 $271,854 $268,288
NAM TAI ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE PERIODS ENDED JUNE 30, 2008 AND 2007
(In Thousands of US Dollars)
1. The entrusted loan represents the loan arrangement between two
subsidiaries, Namtai Electronic (Shenzhen) Co. Ltd. (the 'entrusting party')
and Jetup Electronic (Shenzhen) Co. Ltd. (the 'borrower'), via HSBC Bank
(China) Company Limited, Shenzhen Branch (the 'lender').
2. Accumulated other comprehensive income represents foreign currency
translation adjustments and unrealized gain on marketable securities. The
comprehensive income of the Company was $40,170 and $37,124 for the six months
ended June 30, 2008 and June 30, 2007, respectively.
3. Business segment information - The Company operates primarily in three
segments, the Consumer Electronic and Communication Products ('CECP') segment,
Telecommunication Component Assembly ('TCA') segment, and the LCD Products
('LCDP') segment.
Unaudited Unaudited
Three months ended Six months ended
June 30 June 30
2008 2007 2008 2007
NET SALES :
- CECP $73,391 $75,732 $143,178 $130,291
- TCA 51,876 99,846 111,158 220,008
- LCDP 20,901 22,252 38,961 39,102
Total net sales $146,168 $197,830 $293,297 $389,401
NET INCOME :
- CECP $7,284 $35,397 $14,942 $39,980
- TCA 2,088 3,140 4,201 7,161
- LCDP (135) 369 (98) 564
- Corporate 2,567 (101) 21,125 (501)
Total net income $11,804 $38,805 $40,170 $47,204
Unaudited Audited
June 30, Dec. 31,
2008 2007
IDENTIFIABLE ASSETS BY SEGMENT:
- CECP $216,740 $212,098
- TCA 113,769 150,963
- LCDP 69,046 64,628
- Corporate 122,277 117,129
Total assets $521,832 $544,818
4. A summary of the net sales, net income and long-lived assets by
geographic areas is as follows:
Unaudited Unaudited
Three months ended Six months ended
June 30 June 30
2008 2007 2008 2007
NET SALES FROM OPERATIONS
WITHIN:
-PRC, excluding Hong Kong
and Macao:
Unaffiliated customers $146,168 $197,830 $293,297 $389,401
Intercompany sales 38 42 118 149
-Intercompany eliminations (38) (42) (118) (149)
Total net sales $146,168 $197,830 $293,297 $389,401
NET INCOME FROM OPERATIONS
WITHIN:
-PRC, excluding Hong Kong $6,377 $33,370 $11,253 $37,370
and Macao
-Hong Kong & Macao 5,427 5,435 28,917 9,834
Total net income $11,804 $38,805 $40,170 $47,204
Unaudited Audited
June 30, Dec. 31,
2008 2007
LONG-LIVED ASSETS WITHIN:
-PRC, excluding Hong Kong and Macao $104,216 $98,441
-Hong Kong and Macao 194 158
Total long-lived assets $104,410 $98,599
SOURCE Nam Tai Electronics, Inc.