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22nd February 2000, British Columbia, Canada
Nam Tai Electronics, Inc. 1999 Sales Up 42.7%, Net Income Up 234%, EPS $1.25 vs. $0.34
Nam Tai Electronics, Inc. today announced unaudited year end results. Net sales for the year ended December 31, 1999 increased by 42.7% to a record high of $145.1 million from $101.6 million for 1998. Operating income for the year ended December 31, 1999 decreased 4.8% to $8.0 million from $8.4 million for 1998. Net income for the year ended December 31, 1999 increased 234% to $11.8 million from $3.5 million for 1998. Basic earnings per share for the year ended December 31, 1999 were $1.26 compared to $0.34 for the prior year period. Diluted earnings per share were $1.25 compared to $0.34 for the prior year period.
Net sales for the fourth quarter of 1999 were $38.3 million, up 84% compared to $20.9 million for the fourth quarter of 1998. Operating loss in the fourth quarter of 1999 was $0.6 million compared to $0.8 million for the fourth quarter 1998. Net income in the fourth quarter of 1999 was $1.0 million, compared to a loss of $7.7 million for the fourth quarter of 1998. Basic and diluted earnings per share for the fourth quarter of 1999 were $0.11 versus a loss of $0.78 for the fourth quarter of 1998.
The Company's gross profit margin was 12.5% for the fourth quarter 1999 versus 24.7% in the prior year period as a result of material shortages, material quality problems, inventory write-offs, currency fluctuations, a shifting product mix, continuing pricing pressure and problems with the Company's Chip on Glass ("COG'') production equipment leading to higher defect rates.
"By attaining additional orders in the fourth quarter, Nam Tai achieved record sales for 1999 despite problems with our COG equipment, higher defect rates, and material shortages'', explained Mr. Murakami, Nam Tai's Chairman. "We are happy that these difficulties, which caused a decline in our 4th quarter gross margin, are now behind us. With these problems mostly resolved, margins should begin improving in the first quarter 2000, with a further improvement and full recovery by the second quarter. With expected improvements in gross margins, and strong growth in sales, management is confident of achieving its sales and profit targets for year 2000.''
The Company has been trying its best to resolve technical difficulties with its second line of COG equipment. The second line is supposed to operate at higher specifications than the first line. Unfortunately, when operated at the higher specification levels, the production defect rate exceeds the original quality tolerance targets. The Company expects these problems to be totally solved by May, in time to benefit from additional orders which will push the Company's COG production to full capacity. In the interim, starting in March, this line will manufacture products with the same specifications as the first COG line.
Following eleven consecutive profitable years since its initial public offering in 1988, the Company continues to maintain a strong financial position, ending 1999 with $6.13 of cash per share and approximately $14.20 of net book value per share, based on 8,840,823 shares outstanding as at December 31, 1999. The Company, as at December 31, 1999, had a cash to current liabilities ratio of 1.6:1, a current ratio of 2.8:1, a total assets to total liabilities ratio of 4.8:1, no long term debt, and approximately $54.2 million of cash, $44.8 million of which is in short term deposits in U.S. currency.
Nam Tai Telecom
Market response to Nam Tai Telecom has been very positive with orders fully booked up to the end of the second quarter, including the first orders to produce over 170,000 units of Family Radio Systems for the U.S. market with delivery requested in the months of April and May 2000.
"We are excited that we are successfully expanding and growing our telecommunication business with new products and additional customers and we have never lost any customers since entering this industry'', commented Mr. Murakami. ``We expect that the business will continue experiencing successful growth and we are planning to release further expansion details on March 20th pending the obtaining of customer consent.''
Update on Investment in Albatronics
In 1999 Nam Tai commenced legal proceedings against Albatronics seeking compensation to recover its investment claiming damages for breach of representations, warranties and undertakings. Nam Tai believes that its investment in Albatronics should be treated as unsecured debt and share pro rata in any distribution of liquidation proceeds.
Annual Shareholders Meeting
Fourth Quarter and Year End Results Analyst Conference Call
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 including LCD modules and, in the near future, rechargeable battery packs which are used in cellular phones, laptop computers, 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
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