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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of: August 2011

Commission File Number: 001-31583

 

 

NAM TAI ELECTRONICS, INC.

(Translation of registrant’s name into English)

 

 

Gushu Industrial Estate, Xixiang Baoan, Shenzhen People’s Republic of China

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F

Form 20-F  x             Form 40-F  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes  ¨    No  x

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-            .

 

 

 


LOGO    SECOND QUARTER NEWS RELEASE

 

Investor relations contact: Mr. Michael L. Luechtefeld    Please refer to the Nam Tai website (www.namtai.com)

E-mail: shareholder@namtai.com or the SEC website (www.sec.gov) for Nam Tai press releases and financial statements.

NAM TAI ELECTRONICS, INC.

Q2 2011 Sales up 30%, Gross profit margin at 6.4%

SHENZHEN, PRC – August 1, 2011 – Nam Tai Electronics, Inc. (“Nam Tai” or the “Company”) (NYSE Symbol: NTE) today announced its unaudited results for the second quarter ended June 30, 2011.

KEY HIGHLIGHTS

(In thousands of US Dollars, except per share data, percentages and as otherwise stated)

 

     Quarterly Results     Half year Results  
     Q2 2011     Q2 2010     YoY(%)     1H 2011     1H 2010     YoY(%)  

Net sales

   $ 147,705      $ 113,912        29.7      $ 309,601      $ 193,178        60.3   

Gross profit

   $ 9,451      $ 12,706        (25.6   $ 17,666      $ 19,209        (8.0

% of sales

     6.4     11.2     —          5.7     9.9     —     

Operating income (a)

   $ 679      $ 3,796        (82.1   $ 923      $ 3,219        (71.3

% of sales

     0.5     3.3     —          0.3     1.7     —     

per share (diluted)

   $ 0.02      $ 0.08        —        $ 0.02      $ 0.07        —     

Net income (a)

   $ 3,003      $ 3,211        (6.5   $ 5,021      $ 2,114        137.5   

% of sales

     2.0     2.8     —          1.6     1.1     —     

Basic earnings per share

   $ 0.07      $ 0.07        —        $ 0.11      $ 0.05        —     

Diluted earnings per share

   $ 0.07      $ 0.07        —        $ 0.11      $ 0.05        —     

Weighted average number of shares (‘000)

            

Basic

Diluted

    

 

44,804

44,833

  

  

   

 

44,804

44,807

  

  

   

 

—  

—  

  

  

   

 

44,804

44,844

  

  

   

 

44,804

44,809

  

  

   

 

—  

—  

  

  

Note:

(a) Net income of the three months ended June 30, 2011 included interest income of $0.8 million, exchange gain of $2.1 million and a deferred tax credit of $0.8 million arising from the tax losses of Wuxi FPC (“Flexible Printed Circuit”) business, whereas the actual utilization of such deferred tax asset depends on future profit streams of that business.

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 / (loss), net income / (loss) and earnings (loss) 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 employee severance benefits in PRC subsidiaries. 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/(loss) 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.

 

Page 1 of 12


GAAP TO NON-GAAP RECONCILIATION

(In millions of US Dollars, except for per share (diluted) and numbers of shares)

 

    Three months ended
June 30,
    Six months ended
June 30,
 
    2011     2010     2011     2010  
  millions     per share
(diluted)
    millions     per share
(diluted)
    millions     per share
(diluted)
    millions     per share
(diluted)
 

GAAP Operating Income

  $ 0.7      $ 0.02      $ 3.8      $ 0.08      $ 0.9      $ 0.02      $ 3.2      $ 0.07   

Add back:

               

– Share-based compensation expenses(a)

    0.1        —          —          —          0.1        —          —          —     

– Employee severance benefits in PRC subsidiaries(b)

    0.3        0.01        0.7        0.02        0.3        0.01        0.7        0.02   

Non-GAAP Operating Income

  $ 1.1      $ 0.03      $ 4.5      $ 0.10      $ 1.3      $ 0.03      $ 3.9      $ 0.09   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net Income

  $ 3.0      $ 0.07      $ 3.2      $ 0.07      $ 5.0      $ 0.11      $ 2.1      $ 0.05   

Add back:

               

– Share-based compensation expenses(a)

    0.1        —          —          —          0.1        —          —          —     

– Employee severance benefits in PRC subsidiaries (after deducting tax) (b)

    0.2        0.01        0.5        0.01        0.2        0.01        0.5        0.01   

Non-GAAP Net Income

  $ 3.3      $ 0.08      $ 3.7      $ 0.08      $ 5.3      $ 0.12      $ 2.6      $ 0.06   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares – diluted (‘000)

    44,833          44,807          44,844          44,809     

Notes:

(a) The share-based compensation expenses included approximately $0.1 million attributable to options to purchase 60,000 shares granted in the second quarter of 2011 to directors in accordance with the Company’s practice of making annual option grants to its directors upon their election for the ensuing year.
(b) The expense represents employee benefit and severance arrangements in accordance with the PRC statutory severance requirements.

 

Page 2 of 12


SUPPLEMENTARY INFORMATION (UNAUDITED) IN THE SECOND QUARTER OF 2011

1. Quarterly Sales Breakdown

(In thousands of US Dollars, except percentage information)

 

Quarter

   2011      2010      YoY(%)
(Quarterly)
     YoY(%)
(Quarterly
accumulated)
 

1st Quarter

     161,896         79,266         104.2         104.2   

2nd Quarter

     147,705         113,912         29.7         60.3   

3rd Quarter

     —           174,744         

4th Quarter

     —           166,498         

Total

     309,601         534,420         

2. Breakdown of Net Sales by Product Segment (as a percentage of Total Net Sales)

 

      2011      2010  

Segments

   Q2 (%)      YTD (%)      Q2 (%)      YTD (%)  

Key Components Assembly – Telecommunications (“TCA”)

     86         85         73         75   

Consumer Electronic and Communication Products (“CECP”)

     14         15         27         25   
     100         100         100         100   

Prior to year 2009, the Company operated in three reportable segments—telecommunication components assembly (“TCA”), consumer electronics and communication products (“CECP”), and LCD products (“LCDP”). In 2010, pursuant to merger of the Company’s two PRC subsidiaries represented by LCDP and TCA segments into one Shenzhen subsidiary in 2010, the chief operating decision maker reviews the segment results of two business segments (TCA and CECP) when making decisions about allocating resources and assessing performance. The change in segment reporting was due to the following:

 

   

Most of the LCDP business has been LCD module assembly for telecommunication products in 2010, which is similar to the business operated by TCA. In view of the similarity of the products, the Company has merged the LCDP segment into the TCA segment;

 

   

After the merger, all the TCA business is run by one management team;

 

   

The Company discontinued CECP production for bluetooth headsets and calculators with two major box-built customers in the fourth quarter 2010. Should the CECP segment falls below the threshold prescribed under Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) 280-10-50-12, management may aggregate this segment to TCA; and

 

   

In 2010, the Flexible Printed Circuit Board (“FPCB”) business was too small to be designated as a separate business segment. In addition, FPCB is regarded as WIP (“work in progress”) for internal use by the Company, i.e. it is manufactured for a more value adding process, FPC assembling.

The segment information for 2010 time periods have been restated in order to conform to the change in presentation of segment reporting in 2011 in accordance with FASB ASC 280-10-50-34. The results of the former LCDP segment were included in the TCA segment in 2010.

 

Page 3 of 12


3. Key Highlights of Financial Position

 

     As at June 30,     As at December 31  
     2011     2010     2010  

Cash on hand

   $ 212.3 million      $ 203.0 million      $ 228.1 million   

Ratio of cash to current liabilities

     1.96        2.04        1.98   

Current ratio

     3.04        3.11        2.93   

Ratio of total assets to total liabilities

     4.09        4.25        3.86   

Return on equity

     3.0     1.3     4.5

Ratio of total liabilities to total equity

     0.32        0.31        0.35   

Debtors turnover

     44 days        74 days        51 days   

Inventory turnover

     22 days        25 days        22 days   

Average payable period

     54 days        87 days        64 days   

OPERATIONS REVIEW

Sales in the second quarter of 2011 were $147.7 million, up 29.7% from sales of $113.9 million in the same quarter of 2010. Gross profit of $9.5 million in the second quarter 2011 decreased 25.6% from $12.7 million in the same quarter last year. Gross profit margin in second quarter of 2011 decreased to 6.4%, down from 11.2% in the second quarter of 2010. The gross profit margin decrease was mainly due to three reasons. First, product mix, box-built products with higher gross margin such as Bluetooth headset and calculators have been discontinued. Consistent with its long-term business strategy the Company is narrowing its focus to higher-growth, lower-margin business opportunities, such as key component assembly for telecommunication products, which leverage Company core strengths. Second, increased labor cost, increases in basic wages for labor since last year decreased margins in second quarter 2011. Third, startup costs, operating losses at the Company’s facility in Wuxi completed in 2009 continued although the Wuxi site began manufacture and assembly of flexible printed circuit boards in 2010.

Lower gross margins resulted in operating income of $0.7 million in the second quarter of 2011, down from $3.8 million in the second quarter of 2010. The operating income decrease was largely offset by increased interest income and currency exchange gains, and the Company earned net income of $3.0 million in the second quarter of 2011 compared with the $3.2 million for the second quarter of last year.

For the six months ended June 30, 2011, our net sales were $309.6 million, an increase of 60.3% as compared to $193.2 million in the same period of last year. The Company’s gross profit margin was 5.7% as compared to 9.9% in the same period of 2010. Gross profit was $17.7 million, down 8.0% as compared to $19.2 million in the same period of last year. We reported operating income for the first six months of 2011 of $0.9 million, compared to operating income of $3.2 million in the same period of last year. Our net income for the six months ended June 30, 2011 was $5.0 million, or $0.11 per share (diluted), as compared to net income of $2.1 million, or $0.05 per share (diluted), in the same period of last year.

EXPANSION PROJECTS

The Company has two separate site-expansion projects in progress, one in Shenzhen and one in Wuxi. Both projects are critical to the Company’s future growth and both depend upon the prompt action and cooperation of the local PRC government.

Following the report in the first quarter 2011, the raw land in Guangming Hi-Tech Industrial Park, Shenzhen, PRC, approximately 30 minutes driving distance from existing facilities in Gushu, Shenzhen and one hour driving distance from Hong Kong, has not yet been delivered to the Company. Though the Company fully paid for the land use rights for this land four years ago, the local Government has not yet indicated when the land will be released. The Company is actively working to resolve this matter.

 

Page 4 of 12


The other expansion project involves acquisition of land use rights for approximately 500,000 square feet of raw land adjacent to the Company’s operational manufacturing facility in Wuxi in order to construct structures, such as dormitories, canteen, labor activity center, research laboratory, and testing and training centers, to support operations at the Wuxi manufacturing facility. The local Wuxi government has indicated that it strongly supports the Company’s planned expansion and development, and the acquisition of land use rights is currently pending final government approvals. The company expects this matter to be resolved in the third quarter of 2011.

Non-GAAP Financial Information

Non-GAAP operating income for the second quarter of 2011 was $1.1 million, or $0.03 per share (diluted), compared to non-GAAP operating income of $4.5 million, or $0.10 per share (diluted), in the second quarter of 2010. Non-GAAP net income for the second quarter of 2011 was $3.3 million or $0.08 per share (diluted), compared to $3.7 million, or $0.08 per share (diluted), in the second quarter of 2010.

COMPANY OUTLOOK

The Company mainly produces LCD modules and telecommunications subassemblies for Japanese multi-national corporations (MNCs) supplying global customers. Key components for these subassemblies are manufactured in Japan. As previously reported, the impact of key component shortages resulting from the earthquake in Japan was minimized and by the end of the second quarter supply of key components recovered and caught up with demand. The second quarter tends to be a seasonal slow period following financial year end for Japanese companies, and these factors together with global economic conditions contributed to an 8.7% decline in Company revenue from first quarter 2011. However, with year-on-year quarter revenue growth of nearly 30% Company year-to-date revenue growth has exceeded 60% so far in 2011. The business is expected to continue building momentum and achieve profitable growth in the third and fourth quarters.

The Company projects continuing growth in long term global demand for telecommunications subassemblies. The Company is well-positioned to benefit from this trend and will emphasize increased focus on core capabilities, expanding manufacturing capacity significantly to meet growing demand for LCD modules resulting from applications in telecommunications market segments such as smart phones and tablets.

Continuing inflation in China and appreciation of the PRC renminbi is expected to further increase labor cost pressure on margins and necessitate ongoing cost control measures to sustain profitability. However, the Company anticipates business growth in the third and fourth quarter to accelerate the rate of improvement in the financial performance of the Wuxi manufacturing facility, enabling breakeven performance by the end of the fourth quarter.

 

Page 5 of 12


PAYMENT OF QUARTERLY DIVIDENDS FOR 2011

As announced on November 1, 2010, the Company resumed payment of quarterly dividends in 2011. The following table repeats and updates the previously announced schedule for declaration and payment of quarterly dividends in 2011.

 

Quarterly
Payment

  

Record Date

  

Payment Date

   Dividend
(per  share)
    

Status

Q1 2011

   December 31, 2010    January 20, 2011    $ 0.05       PAID

Q2 2011

   March 31, 2011    April 20, 2011    $ 0.05       PAID

Q3 2011

   June 30, 2011    July 20, 2011    $ 0.05       PAID

Q4 2011

   September 30, 2011    October 20 - 31, 2011    $ 0.05      

Total for Full Year 2011

   $ 0.20      

The Company’s resumption of dividend payments for 2011 does not necessarily mean that dividend payments will continue thereafter. Whether future dividends will be declared will depend upon the Company’s future growth and earnings, of which there can be no assurance, and the Company’s cash flow needs for future expansion. Accordingly, there can be no assurance that cash dividends on the Company’s common shares will be declared beyond those declared for 2011, what the amounts of such dividends will be or whether such dividends, once declared for a specific period will continue for any future period, or at all.

PROPOSED SCHEDULE OF RELEASE OF QUARTERLY FINANCIAL RESULTS FOR Q3 to Q4 2011

 

Announcements of Financial Results

Quarter

  

Date of release

Q3 2011

   October 31, 2011 (Mon)

Q4 2011

   February 13, 2012 (Mon)

 

Page 6 of 12


FORWARD-LOOKING STATEMENTS AND FACTORS THAT COULD CAUSE OUR SHARE PRICE TO DECLINE

Express or implied statements in this press release, such as the statements included in “Expansion Projects” and “Company Outlook,” particularly management’s intention to focus its business on key components assembly for telecommunication products and expectations expressed regarding the action and cooperation of the local PRC government as to our expansion projects in Shenzhen and Wuxi; assessment of the impact of the Japanese earthquake on the performance of the Company in 2011; expectation that the business continues building momentum and profitable growth will be achieved in coming quarters; projection of continuing growth in long term global demand for telecommunications subassemblies; expansion of manufacturing capacity to meet growing demand for LCD modules; perception of increasing inflation and appreciation of PRC renminbi; the Company’s ability to control costs; and anticipation of business growth which accelerates the improvement in the financial performance of Wuxi manufacturing facility and enables breakeven performance by the year end 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. Actual results could differ materially from those projected in these forward-looking statements as a result of a number of factors, including deterioration of the markets for the Company’s customers’ products and the global economy as a whole, which could negatively impact the Company’s revenue and the ability of the Company’s customers to pay for the Company’s products; customer bankruptcy filings; the sufficiency of the Company’s cash position and other sources of liquidity to operate its business; competition negatively impacting the Company’s revenues and margins; and one or more of the factors discussed in “Item 3. Key Information — Risk Factors” in the Company’s Annual Report on Form 20-F for the year ended December 31, 2010 as filed on March 16, 2011 with the Securities and Exchange Commission.

For further information regarding risks and uncertainties associated with Nam Tai’s business, operating results or financial condition, please refer to the “Operating and Financial Review and Prospects,” “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 and Reports on Form 6-K containing releases of Nam Tai’s quarterly financial results, copies of which may be obtained from Nam Tai’s website at http://www.namtai.com or from the SEC’s EDGAR website at http://www.sec.gov.

All information in this press release is as of August 1, 2011 in Shenzhen of the People’s Republic of China except as otherwise indicated. 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, unless so required by law.

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, consumer electronic, medical and automotive products. Through our electronics manufacturing services operations, we manufacture electronic components and subassemblies, including LCD modules, FPC subassemblies and image-sensor modules and PCBAs. 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 Electronics, Inc. is registered in the British Virgin Islands and listed on the New York Stock Exchange (Symbol “NTE”). All the Company’s operations are located in the People’s Republic of China and its investor relations office is located in Hong Kong.

 

Page 7 of 12


NAM TAI ELECTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

FOR THE PERIODS ENDED JUNE 30, 2011 AND 2010

(In Thousands of US Dollars except share and per share data)

 

    

Unaudited

Three months ended

June 30

   

Unaudited

Six months ended

June 30

 
     2011     2010     2011     2010  

Net sales

   $ 147,705      $ 113,912      $ 309,601      $ 193,178   

Cost of sales

     138,254        101,206        291,935        173,969   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     9,451        12,706        17,666        19,209   

Costs and expenses

        

General and administrative expenses

     6,670        6,042        12,132        10,568   

Selling expenses

     1,261        1,422        2,921        2,493   

Research and development expenses

     841        1,446        1,690        2,929   
  

 

 

   

 

 

   

 

 

   

 

 

 
     8,772        8,910        16,743        15,990   

Operating income

     679        3,796        923        3,219   

Other income (expenses) , net(1)

     2,516        784        3,057        614   

Interest income

     834        325        1,480        604   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income tax

     4,029        4,905        5,460        4,437   

Income tax expenses(2)

     (1,026     (1,694     (439     (2,323
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 3,003      $ 3,211      $ 5,021      $ 2,114   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income per share

        

Basic

   $ 0.07      $ 0.07      $ 0.11      $ 0.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.07      $ 0.07      $ 0.11      $ 0.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of shares (’000)

        

Basic

     44,804        44,804        44,804        44,804   

Diluted

     44,833        44,807        44,844        44,809   

Notes:

(1) Other income in the second quarter of 2011 included exchange gain of $2.1 million mainly due to the continuing appreciation of RMB against USD during this quarter.
(2) Income tax expense of the three months ended June 30, 2011 included a deferred tax credit of $0.8 million arising from the tax losses of Wuxi FPC (“Flexible Printed Circuit”) business, whereas the actual utilization of such deferred tax asset depends on future profit streams of that business.

 

Page 8 of 12


NAM TAI ELECTRONICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

AS AT JUNE 30, 2011 AND DECEMBER 31, 2010

(In Thousands of US Dollars)

 

     Unaudited
June 30
2011
    Audited
December 31
2010
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 212,269      $ 228,067   

Accounts and notes receivable, net

     74,087        74,176   

Inventories

     35,492        29,058   

Prepaid expenses and other receivables

     6,915        5,719   

Deferred tax assets – current

     192        376   

Income tax recoverable

     107        105   
  

 

 

   

 

 

 

Total current assets

     329,062        337,501   
  

 

 

   

 

 

 

Property, plant and equipment, net

     88,866        88,895   

Land use rights

     12,152        12,264   

Deposits for property, plant and equipment

     5,073        477   

Goodwill

     2,951        2,951   

Deferred tax assets-non current

     10,495        8,423   

Other assets

     375        269   
  

 

 

   

 

 

 

Total assets

   $ 448,974      $ 450,780   
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Accounts payable

   $ 85,775      $ 84,590   

Accrued expenses and other payables

     15,269        17,484   

Dividend payable

     4,480        8,961   

Income tax payable

     2,804        4,232   
  

 

 

   

 

 

 

Total current liabilities

     108,328        115,267   

Deferred tax liabilities

     1,379        1,379   
  

 

 

   

 

 

 

Total liabilities

     109,707        116,646   

EQUITY

    

Nam Tai shareholders’ equity:

    

Common shares

     448        448   

Additional paid-in capital

     287,055        286,943   

Retained earnings

     51,772        46,751   

Accumulated other comprehensive loss

     (8     (8
  

 

 

   

 

 

 

Total shareholders’ equity

     339,267        334,134   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 448,974      $ 450,780   
  

 

 

   

 

 

 

 

Page 9 of 12


NAM TAI ELECTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

FOR THE PERIODS ENDED JUNE 30, 2011 AND 2010

 

    

Unaudited

Three months ended

June 30

   

Unaudited

Six months ended

June 30

 
     2011     2010     2011     2010  

CASH FLOWS FROM OPERATING ACTIVITIES

        

Net income (loss)

   $ 3,003      $ 3,211      $ 5,021      $ 2,114   

Adjustments to reconcile net income to net cash provided by operating activities:

        

Depreciation and amortization of property, plant and
equipment and land use right

     4,444        6,505        9,155        12,942   

Loss (gain) on disposal of property, plant and equipment

     37        (412     40        (434

Share-based compensation expenses

     112        —          112        —     

Deferred income taxes

     (684     (231     (1,888     12   

Unrealized exchange (gain) loss

     (1,344     (505     (2,010     (505

Changes in current assets and liabilities:

        

(Increase) decrease in accounts receivable

     12,666        (27,011     89        (20,035

(Increase) decrease in inventories

     (7,531     (8,938     (6,434     (7,371

(Increase) decrease in prepaid expenses and other receivables

     1,773        (860     (1,196     (1,619

(Increase) decrease in income tax recoverable

     (2     —          (2     —     

(Decrease) increase in notes payable

     —          —          —          (691

(Decrease) increase in accounts payable

     (4,223     33,628        1,185        24,064   

(Decrease) increase in accrued expenses and other payables

     (1,502     (966     (1,669     585   

(Decrease) increase in income tax payable

     614        1,475        (1,428     1,216   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total adjustments

     4,360        2,685        (4,046     8,164   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

   $ 7,363      $ 5,896      $ 975      $ 10,278   
  

 

 

   

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

        

Purchase of property, plant and equipment

     (3,953     (377     (9,600     (3,457

(Increase) decrease in deposits for purchase of property, plant and equipment

     (3,795     (257     (4,596     (427

(Increase) decrease in other assets

     —          —          (106     —     

Proceeds from disposal of property, plant and equipment

     —          441        —          502   

(Increase) decrease in fixed deposits maturing over three months

     —          —          —          12,903   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used in) provided by investing activities

   $ (7,748   $ (193   $ (14,302   $ 9,521   
  

 

 

   

 

 

   

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

        

Cash dividends paid

   $ (2,241   $ —        $ (4,481   $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used in) provided by financing activities

   $ (2,241   $ —        $ (4,481   $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (2,626     5,703        (17,808     19,799   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at beginning of period

     213,551        196,818        228,067        182,722   
  

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

     1,344        505        2,010        505   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 212,269      $ 203,026      $ 212,269      $ 203,026   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Page 10 of 12


NAM TAI ELECTRONICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

FOR THE PERIODS ENDED JUNE 30, 2011 AND 2010

(In Thousands of US Dollars)

 

1. Accumulated other comprehensive loss represents foreign currency translation adjustments. The comprehensive income was $3,003 and $3,211 for the three months ended June 30, 2011 and 2010 respectively.

 

2. Business segment information – The Company operates primarily in two segments, Key Components Assembly – Telecommunications (“TCA”) segment and the Consumer Electronic Communication Products (“CECP”) segment.

 

    

Unaudited

Three months ended

June 30

   

Unaudited

Six months ended

June 30

 
     2011     2010     2011     2010  

NET SALES :

        

- TCA

   $ 126,380      $ 82,872      $ 263,699      $ 144,951   

- CECP

     21,325        31,040        45,902        48,227   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

   $ 147,705      $ 113,912      $ 309,601      $ 193,178   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME :

        

- TCA

   $ 2,628      $ 1,217      $ 3,960      $ 235   

- CECP

     444        3,244        2,044        4,114   

- Corporate

     (69     (1,250     (983     (2,235
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net income

   $ 3,003      $ 3,211      $ 5,021      $ 2,114   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     

Unaudited

Jun. 30,
2011

    

Audited

Dec. 31,
2010

 

IDENTIFIABLE ASSETS BY SEGMENT:

     

- TCA

   $ 198,718       $ 197,083   

- CECP

     53,100         55,569   

- Corporate

     197,156         198,128   
  

 

 

    

 

 

 

Total assets

   $ 448,974       $ 450,780   
  

 

 

    

 

 

 

 

Page 11 of 12


NAM TAI ELECTRONICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

FOR THE PERIODS ENDED JUNE 30, 2011 AND 2010

(In Thousands of US Dollars)

 

3. A summary of the net sales, net income and long-lived assets by geographic areas is as follows:

 

    

Unaudited

Three months ended

June 30

   

Unaudited

Six months ended

June 30

 
     2011     2010     2011     2010  

NET SALES FROM OPERATIONS WITHIN:

        

-PRC, excluding Hong Kong and Macao:

        

Unaffiliated customers

   $ 147,705      $ 113,912      $ 309,601      $ 193,178   

Intercompany sales

     69        301        616        436   

-Intercompany eliminations

     (69     (301     (616     (436
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

   $ 147,705      $ 113,912      $ 309,601      $ 193,178   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME (LOSS) FROM OPERATIONS WITHIN:

        

-PRC, excluding Hong Kong and Macao

   $ 4,313      $ 4,461      $ 7,586      $ 4,349   

-Hong Kong & Macao

     (1,310     (1,250     (2,565     (2,235
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net income

   $ 3,003      $ 3,211      $ 5,021      $ 2,114   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     

Unaudited

June 30,
2011

    

Audited

Dec. 31,
2010

 

LONG-LIVED ASSETS WITHIN:

     

- PRC, excluding Hong Kong

   $ 96,292       $ 101,014   

- Hong Kong

     4,726         145   
  

 

 

    

 

 

 

Total long-lived assets

   $ 101,018       $ 101,159   
  

 

 

    

 

 

 

 

Page 12 of 12


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    NAM TAI ELECTRONICS, INC.
Date August 2, 2011     By:  

/S/ M. K. KOO

      Name: M. K. Koo
      Title: Executive Chairman and
                Chief Financial Officer