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PCB and Electronics News
Nam Tai Electronics, Inc. Q1 Sales Up 64%, Net Income Up 87%
VANCOUVER, British Columbia, May 3 /PRNewswire-FirstCall/ -- Nam Tai
Electronics, Inc. ("Nam Tai" or the "Company") (NYSE: 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)
Quarterly Results
Q1/05 Q1/04 YoY(%)
Net sales 156,923 95,435 64.4
Gross Profit 18,417 14,296 28.8
% of sales 11.7 % 15.0 %
Income from operations 9,734 6,931 40.4
% of sales 6.2 % 7.3 %
per share(diluted) $0.23 $0.17 35.3
Net income(a) (b) 13,806 7,387 86.9
% of sales 8.8 % 7.7 %
Basic earnings per share $0.32 $0.18 77.8
Diluted earnings per share $0.32 $0.18 77.8
Weighted average number of
shares ('000)
Basic 42,675 41,231 -
Diluted 42,898 41,292 -
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 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
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)
2Q 2005 2Q 2004 2Q 2005 1Q 2005
(Estimated) (Actual) vs (Actual)
2Q 2004
Sales $170 - $180 $148 15% - 22% $157
Pro Forma
Earnings per
Share (diluted)
(a) (b) $0.28 - $0.32 $0.31 (10)% - 3% $0.23
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
1. Quarterly Sales Breakdown
(In Thousands of US Dollars)
Quarter 2005 2004 YoY(%) YoY(%)
(Quarterly) (Quarterly
accumulated)
1st Quarter 156,923 95,435 64.4 64.4
2nd Quarter - 147,664
3rd Quarter - 137,986
4th Quarter - 152,776
Total* 156,923 533,861
* Total sales for 2005 comprise only three months sales, whereas total
sales for 2004 comprise full twelve months sales
2. Net Sales Breakdown by Product Segment
2005 2004
Segment 1Q YTD 1Q YTD
(%) (%) (%) (%)
Consumer Electronics and
Communication Products (a) 27 % 27 % 29 % 29 %
Telecom. Components Assembly:
- Telecom. Components Assembly (b) 64 % 64 % 58 % 58 %
- Software Development
Services (c) 1 % 1 % 1 % 1 %
Parts & Components:
- LCD Panels (d) 8 % 8 % 12 % 12 %
100 % 100 % 100 % 100 %
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
(unaudited) (audited)
As at March 31 As at December 31
2005 2004 2004
Cash on Hand $164.5 million $63.3 million $160.6 million
Marketable Securities $40.3 million - $41.9 million
Cash/Current Liabilities 1.47 0.85 1.38
Current Ratio 2.96 2.26 2.87
Total Assets/Total
Liabilities 3.95 3.93 3.79
Debtors Turnover 56 days 56 days 62 days
Inventory Turnover 14 days 37 days 18 days
Average Payable Period 52 days 64 days 72 days
First Quarter Results Analyst Conference Call
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
http://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
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
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.
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, 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 http://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
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.
NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
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
Net sales - related parties $5,105 $7,735
Net sales - third parties 151,818 87,700
Total net sales 156,923 95,435
Cost of sales 138,506 81,139
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
8,683 7,365
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)
Income before income taxes, minority interests 15,698 8,149
and equity in income of affiliated companies
Income taxes expense (141) (278)
Income before minority interests 15,557 7,871
Minority interests (1,751) (576)
Income after minority interests 13,806 7,295
Equity in income of affiliated companies - 92
Net income $13,806 $7,387
Net income per share
Basic $0.32 $0.18
Diluted $0.32 $0.18
Weighted average number of shares ('000')
Basic 42,675 41,231
Diluted 42,898 41,292
NAM TAI ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
AS AT March 31, 2005 AND DECEMBER 31, 2004
(In Thousands of US Dollars) Unaudited Audited
March 31 December 31,
2005 2004
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
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)
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
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
Total current liabilities 111,596 116,489
Long-term bank loan - non-current portion 5,044 5,163
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
Total shareholders' equity 303,744 305,053
Total liabilities and shareholders' equity $460,197 $460,473
NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(In Thousands of US Dollars)
Unaudited
Three months ended
March 31
2005 2004
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
Net cash (used in) provided by operating activities $(3,818) $10,547
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
Net cash provided by (used in) investing activities $11,809 $(6,296)
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 -
Net cash used in financing activities $(4,094) $(2,748)
Net increase in cash and cash equivalents 3,897 1,503
Cash and cash equivalents at beginning of period 160,649 61,827
Cash and cash equivalents at end of period $164,546 $63,330
NAM TAI ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
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
NET SALES :
- CECP $42,028 $27,478
- TCA 102,622 56,871
- LCDP 12,273 11,086
Total net sales $156,923 $95,435
NET INCOME :
- CECP $3,882 $3,239
- TCA 9,315 3,463
- LCDP 609 685
Total net income $13,806 $7,387
Unaudited Audited
March 31, Dec. 31,
2005 2004
IDENTIFIABLE ASSETS BY SEGMENT:
- CECP $138,539 $134,473
- TCA 267,881 274,664
- LCDP 53,777 51,336
Total assets $460,197 $460,473
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
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)
Total net sales $156,923 $95,435
NET INCOME WITHIN:
- PRC, excluding Hong Kong & Macao $5,023 $6,388
- Macao 5,514 258
- Hong Kong 3,269 741
Total net income $13,806 $7,387
Unaudited Audited
March 31, Dec. 31,
2005 2004
LONG-LIVED ASSETS WITHIN:
- PRC, excluding Hong Kong & Macao $92,131 $84,453
- Macao 130 134
- Hong Kong 12,655 12,854
Total long-lived assets $104,916 $97,441
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Minneapolis MN 55438 USA
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