Nam Tai Electronics, Inc. Q2 Sales up 37%, EPS up
89% to $0.51
VANCOUVER, British Columbia, Aug. 9 /PRNewswire/ -- Nam Tai Electronics, Inc. (``Nam Tai' or the ``Company')
(Nasdaq: NTAI - news, NTAIW - news) today announced results for the second quarter ended June 30, 1999. Net sales for
the second quarter of 1999 were $42.1 million, an increase of 37% compared to $30.9 million for the second quarter of 1998.
Operating income increased 57% to $3.8 million ($0.41 per share) compared to 1998 second quarter operating income of $2.4
million ($0.24 per share). Non-operating income was $1.1 million, up from $438,000 in 1998. Net income was $4.7 million, an
increase of 67% over $2.8 million in the second quarter of 1998. Basic and diluted earnings per share for the second quarter of
1999 were up 89% to $0.51 versus $0.27 for the second quarter of 1998.
``I am pleased that the strong rebound in sales and earnings that we predicted are now beginning to be reflected in our second
quarter results,' commented Nam Tai's Chairman, Mr. Murakami. ``The diversification of our product mix as a consequence of
increases in shipments of LCD modules for cellular phones, personal organisers, and linguistic products is also satisfying. We
continue to foresee a strong move upward in sales and operating profits throughout the balance of 1999 as we exploit our
recently announced expansion plans and capitalise on our business initiatives started in the first half of 1999.'
Net sales for the six months ended June 30, 1999 increased by 21% to $69.2 million from $57.1 million for the first six months
of 1998. Operating income for the first six months of 1999 increased by 9.6% to $6.3 million ($0.67 per share) from $5.8
million ($0.54 per share) for the prior year period. Non-operating income decreased by $1.6 million to $1.5 million ($0.15 per
share) from $3.1 million ($0.28 per share). As a result, net income for the six month period was down 14% to $7.5 million from
$8.7 million for 1998. Basic and diluted earnings per share for the first six months of 1999 were $0.79 compared to $0.81 for
the prior year period.
The Company continues to maintain a strong financial position, ending the second quarter of 1999 with $8.16 of cash per share
and approximately $13.85 of net book value per share, based on 9,250,323 shares outstanding as at June 30, 1999. The
Company, as at June 30, 1999, had a cash to current liabilities ratio of 1.9:1, a current ratio of 2.9:1, a total assets to total
liabilities ratio of 4.2:1, no long term debt, and approximately $75.5 million of cash, $72 million of which is in short term
deposits in U.S. currency.
The Company's gross profit margin was 20.5% for the second quarter 1999 versus 24.2% in the prior year. ``The 1999 second
quarter margin of 20.5% is down from the 22.0% margin in the first quarter, as a result of a more balanced product line mix, but
continues to remain above industry averages and slightly above our target for the year,' commented Mr. Murakami. ``We also
witnessed improved operating margins (9.0% vs. 7.9%) and net income margins (11.1% vs. 9.1%) compared to the same
period in 1998.'
Sales by product line in the second quarter 1999 versus 1998 were: Calculators (40% vs. 70%), Subassemblies and
Components (25% vs. 8%), and Personal Organizers and Linguistic Products (23% vs. 12%). Sales by region in the second
quarter of 1999 versus 1998 were to North America (30% vs. 53%), Japan (13% vs. 20%), Europe (17% vs. 22%), Hong
Kong and others (40% vs. 5%).
``As a result of strategic business decisions, Nam Tai today is more than just a great calculator company,' commented Mr.
Murakami. ``We have become more diversified, both geographically and by product line and are confident that we will see
strong sales growth in the second half of 1999, particularly from sales of LCD modules for cellular phones, personal organizers
and linguistic products, and telecommunication products.'
In advance of today's positive results, Nam Tai recently released a series of optimistic news releases detailing the following
exciting business developments:
* The establishment of a new Telecommunication division which is
now selling 900MHz phones to private label customers in Europe.
* Success in attracting a new, well-known, ODM customer in Japan
for electronic dictionaries. The Company expects sales in this market
to reach 1.4 million units in 1999, up by 50%.
* The introduction of new Chip on Glass production, an advanced
technology which is used in the manufacturing of LCD modules for
cellular phones. To satisfy expected demand, the Company expects its
monthly production capacity will increase to 1 million units
by September 1999, up 100%.
* An expanded relationship with Legend, China's largest PC manufacturer,
to include joint research and development of new products. Nam Tai in
January was appointed by Legend to manufacture a palm-sized PC with
pre-installed Microsoft Windows CE (Chinese version) operating system
software.
Investment in Group Sense (International) Limited (``Group Sense')
On July 9, 1999 Group Sense, a 20% owned affiliate, released operating results including the six month period ended March
31, 1999. Nam Tai's non-operating income for the quarter ended June 30, 1999 includes $260,000, representing the
Company's share of Group Sense's net income for the six-month period ending March 31, 1999, accounted for under the
equity method.
Dividends
On July 16, 1999 the Company paid a quarterly dividend of $0.08 per share to shareholders of record on June 30, 1999. The
record date for the third quarter dividend of $0.08 per share is September 30, 1999 and the payment date is on or before
October 16, 1999.
Second Quarter Results Analyst Conference Call
The Company will hold an analysts-only conference call today, Monday, August 9, 1999, at 12:00 noon Eastern Time for
analysts to discuss the second quarter results with management. Shareholders, investors and other interested individuals are
invited to listen to the live conference call by dialing (612)-332-0819 just prior to its start time of 12:00 noon Eastern Time on
Monday, August 9, 1999. Callers will be asked to register with the conference call operator.
Analyst Trip to Hong Kong and China visiting the facilities of Nam Tai Electronics, Inc., Deswell Industries Inc. and Bonso
Electronic International Inc.
The Company will be hosting a trip to Hong Kong and Shenzhen China to visit the facilities of Nam Tai, Deswell Industries Inc.
(Nasdaq: DSWL - news), and Bonso Electronic International Inc. (Nasdaq: BNSO - news, BNSOW - news). The trip is
scheduled for August 15th to 20th, 1999. Interested analysts and investors are encouraged to contact the Company for further
details about attending the trip.
Nam Tai Electronics, Inc. is a consumer electronics design and manufacturing service provider to some of the world's leading
original equipment manufacturers. Nam Tai manufactures telecommunication products, palm-sized PC's, personal digital
assistants, linguistic products, calculators, smart card readers and various components which are used in telecommunication
products, electronic toys, and household appliances. The Company utilizes advanced production technologies such as chip on
board (``COB'), chip on glass (``COG'), surface mount technology (``SMT'), tape automated bonding (``TAB') and outer
lead bonding (``OLB') technologies and anistropic conductive film (``ACF') heat seal technology. Further information is
available from Nam Tai's web site at www.namtai.com.
Except for the historical information contained herein, matters discussed in this press release are forward-looking statements.
For example, the Company's expectation regarding future sales and profit growth are forward-looking statements the result of
which are uncertain and dependant upon many factors including end-user demand, fluctuations in sales, changes in product mix,
competitive pressures, technological change, and changes in general economic conditions. Other factors that might cause
differences in this and other forward-looking statements include those discussed in the Company's reports filed with the
Securities and Exchange Commission from time to time, such as the factors set forth in Item 1. ``Description of Business - Risk
Factors' in the Company's Annual Report on Form 20-F for the year ended December 31, 1998.
NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
FOR THE PERIODS ENDED JUNE 30, 1999 AND 1998
(In Thousands of U.S. Dollars except share data)
Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
Net sales $42,136 $30,857 $69,211 $57,137
Cost of sales 33,513 23,392 54,618 43,081
Gross profit 8,623 7,465 14,593 14,056
Costs and expenses
Selling, general and
administrative
expenses 4,224 3,295 7,221 6,284
Research and development
expenses 589 293 1,068 574
Non-recurring expense -- 1,445 -- 1,445
4,813 5,033 8,289 8,303
Income from operations 3,810 2,432 6,304 5,753
Gain on disposal of
property, plant
and equipment 300 490 294 830
Other income (loss) - net (261) (1,129) (674) (131)
Interest income 779 1,077 1,587 2,349
Income before income taxes 4,628 2,870 7,511 8,801
Income tax expense 205 68 280 134
4,423 2,802 7,231 8,667
Share of results of
associated company 260 -- 260 --
Net income $ 4,683 $ 2,802 $ 7,491 $ 8,667
Net income per share
Basic $ 0.51 $ 0.27 $ 0.79 $ 0.81
Diluted $ 0.51 $ 0.27 $ 0.79 $ 0.81
Weighted average number of shares ('000')
Basic 9,252 10,312 9,454 10,712
Diluted 9,252 10,332 9,465 10,731
NAM TAI ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
AS AT JUNE 30, 1999 AND DECEMBER 31, 1998
(In Thousands of U.S. Dollars)
Unaudited Audited
June 30 December 31
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $ 75,471 $ 71,215
Accounts receivable, net 25,397 16,138
Inventories 7,492 4,355
Marketable investments 72 513
Prepaid expenses and deposits 6,803 4,794
Total current assets 115,235 97,015
Investment in unconsolidated subsidiary 1 1
Investment in associated company 16,805 16,223
Property, plant and equipment, at cost 52,873 48,117
Less: accumulated depreciation
and amortisation (17,794) (15,672)
35,079 32,445
Other assets 1,396 1,544
Total assets $168,516 $147,228
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable $ 7,617 $ 329
Accounts payable and accrued expenses 31,686 18,377
Dividend payable 740 665
Income tax payable 277 105
Total current liabilities 40,320 19,476
Deferred tax liabilities 57 56
Shareholders' equity:
Common shares 93 98
Additional paid-in capital 80,241 80,044
Retained earnings 47,761 47,509
Accumulated other comprehensive
income (note 1) 44 45
Total shareholders' equity 128,139 127,696
Total liabilities and
shareholders' equity $168,516 $147,228
NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE PERIODS ENDED JUNE 30, 1999 AND 1998
(In Thousands of U.S. Dollars)
Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
CASH FLOWS FROM OPERATIONS
Net income $ 4,683 $ 2,802 $ 7,491 $ 8,667
Add/(deduct) adjustments to net income:
Depreciation and
amortisation 1,294 1,073 2,535 2,059
Stock option
compensation expense -- -- -- 75
(Gain) loss on disposal
of fixed assets (300) (490) (294) (830)
Equity in income
of affiliated company (260) -- (260) --
Loss on disposal
of subsidiary 290 -- 290 --
(Gain) on disposal
of Deswell shares -- (333) -- (1,299)
Increase in deferred taxes 1 -- 1 --
Changes in current assets and liabilities:
Marketable securities 198 493 441 (674)
Accounts receivable (4,056) (1,763) (9,236) (4,611)
Inventories (1,004) 2,607 (3,137) 4,086
Prepayments and
deposits (2,379) 1,048 (2,009) (675)
Notes payable 5,789 (44) 7,288 (1,000)
Accounts payable 8,330 2,735 13,309 325
Income taxes payable 200 77 172 (67)
8,103 5,403 9,100 (2,611)
Net cash flows
from operations $ 12,786 $ 8,205 $ 16,591 $ 6,056
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on disposal
of Deswell Shares $ -- $ 587 $ -- $ 2,132
Proceeds on disposal
of land in Hong Kong 318 519 318 817
Proceeds on disposal
of fixed assets 2 7 2 377
Additions to fixed assets (4,570) (2,623) (5,206) (3,059)
Other assets 80 (21) 74 (21)
Investment in associated
company (322) (16,279) (322) (16,279)
Net cash flow
from investing $ (4,492) $(17,810) $ (5,134) $(16,033)
CASH FLOWS FROM FINANCING ACTIVITIES
Share buy-back $ (341) $(12,718) $ (4,211) $(16,688)
Redemption of shares -- -- (1,550) --
Dividend paid (743) (707) (1,431) (707)
Net cash flow
from financing $ (1,084) $(13,425) $ (7,192) $(17,395)
Foreign currency
translation adjustments (4) 8 (9) 8
Net change in cash
and cash equivalents 7,206 (23,022) 4,256 (27,364)
Cash and cash equivalents,
beginning of period 68,265 98,069 71,215 102,411
Cash and cash equivalents,
end of period $ 75,471 $ 75,047 $ 75,471 $ 75,047
NAM TAI ELECTRONICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE PERIODS ENDED JUNE 30, 1999 AND 1998
(In Thousands of U.S. Dollars)
1. Accumulated other comprehensive income represents foreign currency
translation adjustments. The comprehensive income of the Company was
$7,490 and $8,675 for the six months ended June 30, 1999 and June 30,
1998, respectively.
2. Certain comparative items have been reclassified to agree to the
presentation in the 1998 audited financial statements.
3. Business segment information -- The Company operates principally in
only one segment of the consumer electronic products industry. A
summary of the net sales, income (loss) from operations and
identifiable assets by geographic areas is as follows:
Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
Net sales from operations within:
- Hong Kong:
Unaffiliated
customers $ 41,408 $ 30,584 $ 67,907 $ 56,596
- PRC, excluding Hong Kong:
Unaffiliated customers 728 273 1,304 541
Intersegment sales 38,444 28,733 63,029 53,134
- Intersegment
eliminations (38,444) (28,733) (63,029) (53,134)
Total net sales $ 42,136 $ 30,857 $ 69,211 $ 57,137
Income (loss) from operations within:
- PRC, excluding
Hong Kong $ 2,662 $ 2,027 $ 4,747 $ 5,030
- Hong Kong 2,535 1,070 3,980 2,534
- North America (514) (295) (1,236) (1,103)
Total net income $ 4,683 $ 2,802 $ 7,491 $ 8,667
As at As at
June 30, 1999 Dec. 31, 1998
Identifiable assets by geographic area:
- PRC, excluding Hong Kong $ 48,156 $ 42,690
- Hong Kong 120,360 85,419
- North America -- 19,119
Total assets $168,516 $147,228
SOURCE: Nam Tai Electronics, Inc. |
