Nam Tai Q1 2006 net sales up 33%, operating income up 30%

Nam Tai Electronics, Inc. announced its unaudited results for the first quarter ended March 31, 2006.

Consistent with its strong performance in 2005, Nam Tai is pleased to announce that it once again achieved outstanding results in the first quarter of 2006. Net sales increased by 32.8% from $157 million in the first quarter of 2005 to $208 million in the first quarter of 2006, which exceeded Nam Tai's first quarter guidance for 2006. Capitalizing on the benefits from the restructuring of its Hong Kong operations in 2005, the Company was successful in reducing its selling, general and administrative expenses as well as research and development expenses as a percentage of sales to 4.1% in the first quarter of 2006 as compared to 5.6% in the same period last year. As a result, the Company's diluted operating income per share increased by 26.1% from $0.23 in the first quarter of 2005 to $0.29 in the first quarter of 2006, and surpassed its first quarter guidance for 2006 by 26.1%. The GAAP diluted earnings per share decreased by 9.4% from $0.32 in the first quarter of 2005 to $0.29 in the first quarter of 2006 mainly due to a gain on sale of a subsidiary's share for $5.9 million in the first quarter of 2005. Most importantly, Nam Tai continued to outperform its industry peers by achieving industry leading gross profit margins of 10.1% and operating profit margins of 6.0% in the first quarter of 2006.

The non-GAAP diluted earnings per share increased by 61.1% to $0.29 in the first quarter of 2006 as compared with $0.18 in the same period last year, and surpassed its first quarter guidance for 2006 significantly by 31.8%. (Please refer to the reconciliation of GAAP operating income to non-GAAP operating income, and GAAP net income and earnings per share to non-GAAP net income and earnings per share and non-GAAP information in page 5.)

Such strong results in the first quarter of 2006 was still attributable to the Company's fast growing and high-tech key component subassemblies of telecommunication products, which continued to outperform its other business segments.

Nam Tai is very pleased to see that its business growth strategy of gaining market share and achieving earnings growth has proven to be highly successful, resulting in its financial performance repeatedly surpassing its expectation.

Company Outlook
With the sales of global high-tech telecommunication products rising continuously, the Company believes the demand for high-tech key component subassemblies will continue to be strong. As a result, the Company expects that its key component subassemblies business will continue to be its major growth driver. As the Company executes its expansion plans, which will enable it to capture the continuous growth opportunities, the Company remains bullish on its long term growth momentum.