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REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 |
SECOND QUARTER NEWS RELEASE |
Quarterly Results | Half year Results | |||||||||||||||||||||||
Q2 2010 | Q2 2009 | YoY(%) | 1H 2010 | 1H 2009 | YoY(%) | |||||||||||||||||||
Net sales |
$ | 113,912 | $ | 101,836 | 11.9 | $ | 193,178 | $ | 203,986 | (5.3 | ) | |||||||||||||
Gross profit |
$ | 12,706 | $ | 10,422 | 21.9 | $ | 19,209 | $ | 17,544 | 9.5 | ||||||||||||||
% of sales |
11.2 | % | 10.2 | % | | 9.9 | % | 8.6 | % | | ||||||||||||||
Operating income (loss) (a) |
$ | 3,796 | $ | 1,425 | 166.4 | $ | 3,219 | $ | (5,114 | ) | | |||||||||||||
% of sales |
3.3 | % | 1.4 | % | | 1.7 | % | (2.5 | %) | | ||||||||||||||
per share (diluted) |
$ | 0.08 | $ | 0.03 | 166.7 | $ | 0.07 | ($0.11 | ) | | ||||||||||||||
Net income (loss) attributable to Nam
Tai shareholders(a )(b) |
$ | 3,211 | $ | 613 | 423.8 | $ | 2,114 | $ | (3,268 | ) | | |||||||||||||
% of sales |
2.8 | % | 0.6 | % | | 1.1 | % | (1.6 | %) | | ||||||||||||||
Basic earnings (loss) per share |
$ | 0.07 | $ | 0.01 | 600.0 | $ | 0.05 | ($0.07 | ) | | ||||||||||||||
Diluted earnings (loss) per share |
$ | 0.07 | $ | 0.01 | 600.0 | $ | 0.05 | ($0.07 | ) | | ||||||||||||||
Weighted average number of shares
(000) |
||||||||||||||||||||||||
Basic |
44,804 | 44,804 | | 44,804 | 44,804 | | ||||||||||||||||||
Diluted |
44,807 | 44,804 | | 44,809 | 44,804 | |
(a) | Operating loss and net loss for the first half of 2009 included $5.1 million restructuring costs in relation to employee severance benefits in PRC subsidiaries. | |
(b) | In November 2009, Nam Tai successfully completed the privatization of Nam Tai Electronic & Electrical Products Limited, or NTEEP, by tendering for and acquiring the 25.12 percent of NTEEP that it did not previously own, i.e., NTEEPs noncontrolling shares, resulting in NTEEP becoming the Companys wholly-owned subsidiary. During the year ended December 31, 2009, including the periods covered by this press release, we reported consolidated net income in accordance with SFAS 160, which required that consolidated net income be reported in amounts that include the amounts attributable to both the parent (Nam Tai) and its noncontrolling interest in NTEEP. Accordingly, Net income (loss) attributable to Nam Tai shareholders in 2009 represents amounts attributable to Nam Tai, net of its non-controlling interest in NTEEP. In 2010, however, Net income (loss) attributable to Nam Tai shareholders represents amounts without deduction for any non-controlling interest. |
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Three months ended Jun 30, | Six months ended Jun 30, | |||||||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||||||
millions | per share (diluted) |
millions | per share (diluted) |
millions | per share (diluted) |
millions | per share (diluted) |
|||||||||||||||||||||||||
GAAP Operating Income
(Loss) |
$ | 3.8 | $ | 0.08 | $ | 1.4 | $ | 0.03 | $ | 3.2 | $ | 0.07 | $ | (5.1 | ) | $ | (0.11 | ) | ||||||||||||||
Add back: |
||||||||||||||||||||||||||||||||
- Share-based
compensation
expenses(a) |
| | 0.1 | | | | 0.1 | | ||||||||||||||||||||||||
- Professional
expenses in relation to
privatization of NTEEP |
| | 0.9 | 0.02 | | | 0.9 | 0.02 | ||||||||||||||||||||||||
- Employee severance
benefits in PRC
subsidiaries(b) |
0.7 | 0.02 | | | 0.7 | 0.02 | 5.1 | 0.11 | ||||||||||||||||||||||||
Non-GAAP Operating Income |
$ | 4.5 | $ | 0.10 | $ | 2.4 | $ | 0.05 | $ | 3.9 | $ | 0.09 | $ | 1.0 | $ | 0.02 | ||||||||||||||||
GAAP Net Income (Loss)
attributable to Nam Tai
shareholders |
$ | 3.2 | $ | 0.07 | $ | 0.6 | $ | 0.01 | $ | 2.1 | $ | 0.05 | $ | (3.3 | ) | $ | (0.07 | ) | ||||||||||||||
Add back: |
||||||||||||||||||||||||||||||||
- Share-based
compensation
expenses(a) |
| | 0.1 | | | | 0.1 | | ||||||||||||||||||||||||
- Professional
expenses in relation to
privatization of NTEEP |
| | 0.9 | 0.02 | | | 0.9 | 0.02 | ||||||||||||||||||||||||
- Employee severance
benefits in PRC subsidiaries
(after deducting tax and
sharing with noncontrolling
interests) (b) |
0.5 | 0.01 | | | 0.5 | 0.01 | 3.2 | 0.07 | ||||||||||||||||||||||||
Non-GAAP Net Income
attributable to Nam Tai
shareholders |
$ | 3.7 | $ | 0.08 | $ | 1.6 | $ | 0.03 | $ | 2.6 | $ | 0.06 | $ | 0.9 | $ | 0.02 | ||||||||||||||||
Weighted average number of
shares diluted (000) |
44,807 | 44,804 | 44,809 | 44,804 |
(a) | The share-based compensation expenses included approximately $0.1 million attributable to options to purchase 75,000 shares granted in the second quarter of 2009 to directors in accordance with the Companys practice of making annual option grants to its directors upon their election for the ensuing year. | |
(b) | The expense represents employee benefits and severance arrangements in accordance with the PRC statutory severance requirements. |
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1. | Quarterly Sales Breakdown (In thousands of US Dollars, except percentage information) |
YoY(%) | ||||||||||||||||
YoY(%) | (Quarterly | |||||||||||||||
Quarter | 2010 | 2009 | (Quarterly) | accumulated) | ||||||||||||
1st Quarter |
79,266 | 102,150 | (22.4 | ) | (22.4 | ) | ||||||||||
2nd Quarter |
113,912 | 101,836 | 11.9 | (5.3 | ) | |||||||||||
3rd Quarter |
| 110,416 | ||||||||||||||
4th Quarter |
| 93,735 | ||||||||||||||
Total |
193,178 | 408,137 |
2. | Breakdown of Net Sales by Product Segment (as a percentage of Total Net Sales) |
2010 | 2009 | |||||||||||||||
Segments |
Q2 ( | %) | YTD (%) | Q2 ( | %) | YTD (%) | ||||||||||
Consumer Electronic and Communication
Products (CECP) |
27 | 25 | 26 | 31 | ||||||||||||
Telecommunication Component Assembly (TCA) |
55 | 56 | 57 | 54 | ||||||||||||
Liquid Crystal Display Products (LCDP) |
18 | 19 | 17 | 15 | ||||||||||||
100 | 100 | 100 | 100 |
3. | Key Highlights of Financial Position |
As at June 30, | As at December 31 | |||||||||||
2010 | 2009 | 2009 | ||||||||||
Cash on hand (a) (b) |
$ | 203.0 | million | $ | 232.2 | million | $ | 182.7 | million | |||
Ratio of cash to current liabilities |
2.04 | 2.54 | 2.39 | |||||||||
Current ratio |
3.11 | 3.58 | 3.59 | |||||||||
Ratio of total assets to total liabilities |
4.25 | 4.96 | 5.21 | |||||||||
Return on Nam Tai shareholders equity |
1.3 | % | (2.0 | %) | 0.5 | % | ||||||
Ratio of total liabilities to total equity |
0.31 | 0.25 | 0.24 | |||||||||
Debtors turnover |
74 | days | 59 | days | 52 | days | ||||||
Inventory turnover |
25 | days | 16 | days | 16 | days | ||||||
Average payable period |
87 | days | 62 | days | 59 | days |
(a) | Includes cash equivalents. Information for December 31, 2009 extracted from the audited financial statements included in the 2009 Form 20-F of the Company filed with the Securities and Exchange Commission on March 16, 2010. | |
(b) | Despite current economic conditions, Nam Tais financial position as at June 30, 2010 remained strong. Net cash provided by operating activities in the second quarter was $5.9 million. |
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(1) | The Bluetooth® word mark and logo are owned by the Bluetooth SIG, Inc. and any use of such mark by Nam Tai is under license. |
Page 4 of 11
Page 5 of 11
Page 6 of 11
Unaudited | Unaudited | |||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net sales |
$ | 113,912 | $ | 101,836 | $ | 193,178 | $ | 203,986 | ||||||||
Cost of sales |
101,206 | 91,414 | 173,969 | 186,442 | ||||||||||||
Gross profit |
12,706 | 10,422 | 19,209 | 17,544 | ||||||||||||
Costs and expenses |
||||||||||||||||
General and administrative expenses (1)(2) |
6,042 | 6,396 | 10,568 | 16,464 | ||||||||||||
Selling expenses(1) |
1,422 | 1,290 | 2,493 | 2,703 | ||||||||||||
Research and development expenses |
1,446 | 1,311 | 2,929 | 3,491 | ||||||||||||
8,910 | 8,997 | 15,990 | 22,658 | |||||||||||||
Operating income (loss) |
3,796 | 1,425 | 3,219 | (5,114 | ) | |||||||||||
Other income (expenses) , net |
784 | (108 | ) | 614 | (106 | ) | ||||||||||
Interest income |
325 | 200 | 604 | 606 | ||||||||||||
Interest expense |
| (114 | ) | | (220 | ) | ||||||||||
Income (loss) before income tax |
4,905 | 1,403 | 4,437 | (4,834 | ) | |||||||||||
Income tax expenses |
(1,694 | ) | (875 | ) | (2,323 | ) | (638 | ) | ||||||||
Net income (loss) |
3,211 | 528 | 2,114 | (5,472 | ) | |||||||||||
Less: Net loss attributable to the
noncontrolling interests |
| 85 | | 2,204 | ||||||||||||
Net income (loss) attributable to Nam Tai shareholders |
$ | 3,211 | $ | 613 | $ | 2,114 | $ | (3,268 | ) | |||||||
Income (loss) per share (attributable to Nam Tai
shareholders) |
||||||||||||||||
Basic |
$ | 0.07 | $ | 0.01 | $ | 0.05 | $ | (0.07 | ) | |||||||
Diluted |
$ | 0.07 | $ | 0.01 | $ | 0.05 | $ | (0.07 | ) | |||||||
Weighted average number of shares (000) |
||||||||||||||||
Basic |
44,804 | 44,804 | 44,804 | 44,804 | ||||||||||||
Diluted |
44,807 | 44,804 | 44,809 | 44,804 |
(1) | The 2010 presentation shows general and administrative expenses and selling expenses as separate line items, whereas the Companys consolidated statements of operations for 2009, as originally published, combined general and administrative expenses and selling expenses as a single line item labeled Selling, general and administrative expenses. General and administrative expenses and selling expenses for 2009 have been presented separately to conform to the 2010 presentation. | |
(2) | General and administrative expenses for the period ended June 30, 2009 include employee severance benefits of $5,058,000 which was disclosed separately in 2009 second quarter news release. |
Page 7 of 11
Unaudited | Audited | |||||||
June 30 | December 31 | |||||||
2010 | 2009 | |||||||
(Note) | ||||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 203,026 | $ | 182,722 | ||||
Fixed deposits maturing over three months |
| 12,903 | ||||||
Accounts receivable, net |
77,946 | 57,911 | ||||||
Inventories |
23,425 | 16,054 | ||||||
Prepaid expenses and other receivables |
4,698 | 3,079 | ||||||
Deferred tax assets current |
1,035 | 1,460 | ||||||
Total current assets |
310,130 | 274,129 | ||||||
Property, plant and equipment, net |
97,107 | 108,110 | ||||||
Land use right |
13,148 | 13,296 | ||||||
Deposits for property, plant and equipment |
459 | 32 | ||||||
Goodwill |
2,951 | 2,951 | ||||||
Deferred tax assets-non current |
5,092 | 4,486 | ||||||
Other assets |
649 | 920 | ||||||
Total assets |
$ | 429,536 | $ | 403,924 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities: |
||||||||
Notes payable |
$ | | $ | 691 | ||||
Accounts payable |
82,731 | 58,667 | ||||||
Accrued expenses and other payables |
15,113 | 16,397 | ||||||
Income tax payable |
1,872 | 656 | ||||||
Total current liabilities |
99,716 | 76,411 | ||||||
Deferred tax liabilities |
1,296 | 1,103 | ||||||
Total liabilities |
101,012 | 77,514 | ||||||
EQUITY |
||||||||
Nam Tai shareholders equity: |
||||||||
Common shares |
448 | 448 | ||||||
Additional paid-in capital |
285,264 | 285,264 | ||||||
Retained earnings |
42,820 | 40,706 | ||||||
Accumulated other comprehensive loss (Note 1) |
(8 | ) | (8 | ) | ||||
Total shareholders equity |
328,524 | 326,410 | ||||||
Total liabilities and shareholders equity |
$ | 429,536 | $ | 403,924 | ||||
Note: |
Information extracted from the audited financial statements included in the 2009 Form 20-F of the Company filed with the Securities and Exchange Commission on March 16, 2010. |
Page 8 of 11
Unaudited | Unaudited | |||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
||||||||||||||||
Net income (loss) |
$ | 3,211 | $ | 528 | $ | 2,114 | $ | (5,472 | ) | |||||||
Adjustments to reconcile net income to net cash
provided by operating activities: |
||||||||||||||||
Depreciation and amortization |
6,505 | 5,068 | 12,942 | 10,483 | ||||||||||||
Gain on disposal of property, plant and equipment |
(412 | ) | (8 | ) | (434 | ) | (263 | ) | ||||||||
Share-based compensation expenses |
| 67 | | 67 | ||||||||||||
Deferred income taxes |
(231 | ) | 297 | 12 | (60 | ) | ||||||||||
Unrealized exchange (gain) loss |
(505 | ) | (34 | ) | (505 | ) | 39 | |||||||||
Changes in current assets and liabilities: |
||||||||||||||||
(Increase) decrease in accounts receivable |
(27,011 | ) | (7,085 | ) | (20,035 | ) | 38,526 | |||||||||
(Increase) decrease in inventories |
(8,938 | ) | 387 | (7,371 | ) | 11,076 | ||||||||||
(Increase) decrease in prepaid expenses and other receivables |
(860 | ) | 1,410 | (1,619 | ) | 1,770 | ||||||||||
Decrease in notes payable |
| | (691 | ) | | |||||||||||
Increase (decrease) in accounts payable |
33,628 | 8,247 | 24,064 | (34,878 | ) | |||||||||||
(Decrease) increase in accrued expenses and other payables |
(966 | ) | (4,368 | ) | 585 | (2,864 | ) | |||||||||
Increase (decrease) in income tax payable |
1,475 | 376 | 1,216 | (320 | ) | |||||||||||
Total adjustments |
2,685 | 4,357 | 8,164 | 23,576 | ||||||||||||
Net cash provided by operating activities |
$ | 5,896 | $ | 4,885 | $ | 10,278 | $ | 18,104 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
||||||||||||||||
Purchase of property, plant and equipment |
(377 | ) | (3,382 | ) | (3,457 | ) | (14,533 | ) | ||||||||
(Increase) decrease in deposits for purchase of property, plant and equipment |
(257 | ) | 855 | (427 | ) | 135 | ||||||||||
Proceeds from disposal of property, plant and equipment |
441 | 9 | 502 | 705 | ||||||||||||
Decrease in fixed deposits maturing over three months |
| | 12,903 | | ||||||||||||
Net cash (used in) provided by investing activities |
$ | (193 | ) | $ | (2,518 | ) | $ | 9,521 | $ | (13,693 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES |
||||||||||||||||
Cash dividends paid |
$ | | $ | | $ | | $ | (9,857 | ) | |||||||
Proceeds from bank loans |
| 788 | | 1,826 | ||||||||||||
Repayment of bank loans |
| (1,198 | ) | | (1,198 | ) | ||||||||||
Net cash used in financing activities |
$ | | $ | (410 | ) | $ | | $ | (9,229 | ) | ||||||
Net increase (decrease) in cash and cash equivalents |
5,703 | 1,957 | 19,799 | (4,818 | ) | |||||||||||
Cash and cash equivalents at beginning of period |
196,818 | 230,169 | 182,722 | 237,017 | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents |
505 | 34 | 505 | (39 | ) | |||||||||||
Cash and cash equivalents at end of period |
$ | 203,026 | $ | 232,160 | $ | 203,026 | $ | 232,160 | ||||||||
Page 9 of 11
1. | Accumulated other comprehensive loss represents foreign currency translation adjustments. The comprehensive income (loss) attributable to Nam Tai shareholders of the Company were $2,114 and ($3,268) for the six months ended June 30, 2010 and June 30, 2009, respectively. | |
2. | 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 | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
NET SALES : |
||||||||||||||||
- CECP |
$ | 31,040 | $ | 26,606 | $ | 48,227 | $ | 62,573 | ||||||||
- TCA |
62,201 | 58,279 | 107,919 | 110,967 | ||||||||||||
- LCDP |
20,671 | 16,951 | 37,032 | 30,446 | ||||||||||||
Total net sales |
$ | 113,912 | $ | 101,836 | $ | 193,178 | $ | 203,986 | ||||||||
NET INCOME : |
||||||||||||||||
- CECP |
$ | 3,244 | $ | 2,042 | $ | 4,114 | $ | 1,997 | ||||||||
- TCA |
214 | 234 | (1,271 | ) | (1,649 | ) | ||||||||||
- LCDP |
1,003 | 249 | 1,506 | (1,408 | ) | |||||||||||
- Corporate |
(1,250 | ) | (1,912 | ) | (2,235 | ) | (2,208 | ) | ||||||||
Total net income (loss)
attributable to Nam Tai
shareholders |
$ | 3,211 | $ | 613 | $ | 2,114 | $ | (3,268 | ) | |||||||
Unaudited | Audited | |||||||
Jun. 30, 2010 | Dec. 31,2009 | |||||||
IDENTIFIABLE ASSETS BY SEGMENT: |
||||||||
- CECP |
$ | 120,351 | $ | 112,058 | ||||
- TCA |
169,624 | 141,734 | ||||||
- LCDP |
32,004 | 42,153 | ||||||
- Corporate |
107,557 | 107,979 | ||||||
Total assets |
$ | 429,536 | $ | 403,924 | ||||
Page 10 of 11
3. | A summary of the net sales, net loss and long-lived assets by geographic areas is as follows: |
Unaudited | Unaudited | |||||||||||||||
Three months ended | Six months ended | |||||||||||||||
June 30 | June 30 | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
NET SALES FROM OPERATIONS WITHIN: |
||||||||||||||||
- PRC, excluding Hong Kong and Macao: |
||||||||||||||||
Unaffiliated customers |
$ | 113,912 | $ | 101,836 | $ | 193,178 | $ | 203,986 | ||||||||
Intercompany sales |
301 | 7 | 436 | 15 | ||||||||||||
- Intercompany eliminations |
(301 | ) | (7 | ) | (436 | ) | (15 | ) | ||||||||
Total net sales |
$ | 113,912 | $ | 101,836 | $ | 193,178 | $ | 203,986 | ||||||||
NET INCOME (LOSS) FROM OPERATIONS WITHIN: |
||||||||||||||||
- PRC, excluding Hong Kong and Macao |
$ | 4,461 | $ | 2,314 | $ | 4,349 | $ | (1,209 | ) | |||||||
- Hong Kong & Macao |
(1,250 | ) | (1,701 | ) | (2,235 | ) | (2,059 | ) | ||||||||
Total net income (loss) attributable to Nam
Tai shareholders |
$ | 3,211 | $ | 613 | $ | 2,114 | $ | (3,268 | ) | |||||||
Unaudited | Audited | |||||||
June. 30, 2010 | Dec. 31,2009 | |||||||
LONG-LIVED ASSETS WITHIN: |
||||||||
- PRC, excluding Hong Kong and Macao |
$ | 110,034 | $ | 121,286 | ||||
- Hong Kong and Macao |
221 | 120 | ||||||
Total long-lived assets |
$ | 110,255 | $ | 121,406 | ||||
Page 11 of 11
NAM TAI ELECTRONICS, INC. |
||||
Date August 3, 2010 | By: | /s/ M. K. Koo | ||
Name: | M. K. Koo | |||
Title: | Executive Chairman and Chief Financial Officer | |||