NTEEP Announces 2009 Q1 Results

Q1 2009 Sales down 30.4%, Gross profit margin at 7.8%

HONG KONG, May 11 /PRNewswire-Asia/ -- Nam Tai Electronic and Electrical Products Limited ("NTEEP" or "the Company") (Stock code: 2633), an electronics manufacturing and design services provider, today announced the unaudited consolidated results of the Company and its subsidiaries (the "Group") for the first quarter of 2009.

Sales in the first quarter of 2009 were US$102.2 million, a decrease of 30.4% as compared to sales of US$146.8 million in the same quarter of 2008. Sales in our TCA segment for the first quarter of 2009 decreased by 11.1% as compared to the same quarter of 2008 mainly because of the declining in sales of flexible printed circuit, or FPC, sub-assemblies. Sales in LCDP segment and CECP segment also dropped by 25.3% and 48.2%, respectively, during the first quarter of 2009 as compared to sales in such segments in the corresponding quarter of 2008. The decrease in sales in LCDP segment was principally a consequence of the decline in sales of LCD panels and our decision to reject an order with very thin margin. Sales in our CECP segment declined significantly because of the continuous effect of the ongoing global economic downturn. The weak demand from end products in the consumer market adversely affected our sales of all products including mobile phone accessories which principally represented sales of our headsets containing Bluetooth(R)1 wireless technology, educational products, optical products and home entertainment devices.

The Company's gross profit margin in the first quarter of 2009 was 7.8% as compared to 13.8% in the first quarter of 2008, primarily resulting from the decline in sales. The lower margin was also caused by a shift of product mix where higher margin products in CECP segment accounted for only 35% of sales in the first quarter of 2009, but 47% of sales in the first quarter of 2008. Gross profit in the first quarter of 2009 was US$8.0 million, a decrease of 60.6% as compared to US$20.3 million in the first quarter of 2008.

Net loss attributable to the Company's shareholders in the first quarter of 2009 was US$8.0 million, which principally resulted from US$5.1 million associated with employee severance benefits expenses incurred in our PRC subsidiaries, as compared to net income of US$9.6 million reported in the first quarter of 2008. Excluding such employee severance benefits expenses in the PRC subsidiaries, the Company recorded an operating loss of US$0.6 million in the first quarter of 2009 (a rare quarterly loss since the Company's IPO in 2004), or US cent 0.06 per share (diluted), compared to operating income of US$12.3 million, or US cents 1.39 per share (diluted) in the first quarter of 2008. Basic and diluted loss per share in the first quarter of 2009 were US cent 0.91 per share, compared to basic and diluted earnings per share of US cents 1.09 in the first quarter of 2008.

The recent global economic downturn may aggravate and exacerbate the difficult business environment we currently face and could result in continuing negative effects to our results of operations over the next several quarters. In an effort to counter the negative effects from the decline in our sales, management is continuing to focus on reducing cost and improving operating and manufacturing efficiencies.

Since December 31, 2008, we have reduced our headcount by 2,000 employees, from 7,100 at the end of December 2008, to 5,100 at the end of March 2009, representing an additional 28.2% reduction in our workforce during the three months ended March 31, 2009. We recognized approximately $5.1 million in pre-tax expenses in connection with these severance and termination arrangements during the three months ended March 31, 2009. Our headcount at September 30, 2008 was 9,700, and thus we have cumulatively reduced our total workforce by 47.4% during the six months ended March 31, 2009, incurring an aggregate of approximately $5.7 million in pre-tax expenses in connection with these severance and termination arrangements during that period. Additionally, beginning in the second quarter of 2009, we began a program to reduce employee salaries by up to 30 percent from the salaries prevailing at the end of the first quarter of 2009. These reductions in headcount and salaries are intended to reduce operating expenses in order to address current market conditions and to better align the Company's manufacturing capacity with the current weak demand we are experiencing across all of our product segments.

Even assuming that the global economic crisis does not deteriorate further, we expect that it will be difficult for the Company to improve operating results significantly or at all in 2009.

We have taken a conservative position regarding expected demand during 2009 as the economic downturn continues or worsens, and expect further near-term declines in revenues that could result in additional losses from operations during periods in 2009 and until the global business environment recovers. However, we continue to work toward better serving our customers in select markets by strengthening our sales force and customer and technical support in Japan and Taiwan. By seeking to capitalize on these perceived opportunities, we hope to ensure a more robust future when end markets stabilize and the recovery cycle begins.

About NTEEP

For more information about NTEEP, please visit its website at http://www.namtaieep.com . For more information about Nam Tai Electronics, Inc., please visit its website at http://www.namtai.com .

Nam Tai Electronic & Electrical Products Limited

2009 Q1 Results Key Highlights

(In thousands of US Dollars, except as otherwise stated)

Quarterly Results

Q1 2009 Q1 2008 (c) YoY

(Restated) (%)

Net Sales (Revenue) 102,150 146,838 (30.4)

Gross Profit 7,998 20,304 (60.6)

% of sales 7.8 13.8 --

Operating (loss) income(a) (5,615) 12,276 (145.7)

% of sales (5.5) 8.4 --

Per share (US cent(s)) (0.64) 1.39 (146.0)

(Loss) profit for the period

attributable to equity

holders of the Company(b) (8,023) 9,579 (183.8)

% of sales (7.9) 6.5 --

Basic (loss) earnings per share

(US cent(s)) (0.91) 1.09 (183.5)

Diluted (loss) earnings per

share (US cent(s)) (0.91) 1.09 (183.5)

Weighted average number of

shares ('000)

Basic 881,671 881,671 --

Diluted 881,671 881,671 --

Notes:

(a) Operating (loss) income = gross profit + other income - other

expenses - selling and distribution costs - administrative expenses -

research and development expenditure - employee severance benefits.

(b) Operating loss and net loss for the first quarter of 2009 included

US$5.1 million employee severance benefits in the PRC subsidiaries.

(Q1/2008: Nil)

(c) The provisionally estimated fair values of assets acquired and

liabilities assumed on the acquisitions of 100% equity interest in

Zastron Precision-Tech Limited and its subsidiaries (the "Zastron

Group") and 100% equity interest in Jetup Electronic (Shenzhen) Co.,

Ltd. ("Jetup", hereinafter together with the acquisition of the

Zastron Group collectively referred as the "Acquisition") on 31

December 2007 were used for preparation of the 2007 annual financial

statements. The fair value assessment was completed at the end of

year 2008; therefore, results in previous quarters of 2008 have been

restated to reflect the finalised fair value of assets acquired and

liabilities from the Acquisition as at 31 December 2007. As a

result, the net income for the three months ended 31 March 2008, has

been increased by approximately US$1,057,000, which was due to the

restatements in amortisation of intangible assets and recognition of

deferred tax liabilities in the corresponding period.

For more information, please contact:

Wong Long Kee

Tel: +852-2263-1065

Fax: +852-2263-1223

Email: lkwong@namtai.com.hk