Nam Tai Q3 sales up 5.1%, operating income down 11.6% EPS down 34.9%

Nam Tai Electronics, Inc. ("Nam Tai" or the "Company") (NYSE Symbol: NTE) announced its unaudited results for the third quarter ended September 30, 2006.

In view of the lower than expected sales and a change of the product mix with lower margins during the third quarter of 2006, Nam Tai announced revised sales and earnings guidance for the third quarter of 2006 on September 1, 2006. Net sales for the third quarter of 2006 were in line with that revised guidance. As a result of implementing cost-control measures in an effort to combat adverse market conditions during the third quarter of 2006, the Company achieved slightly better than expected non-GAAP operating income per share (diluted) and non-GAAP earnings per share (diluted). However, overall results for the third quarter of 2006 were still disappointing as compared with those of Nam Tai's third quarter of 2005 and its original guidance for the third quarter of 2006 announced on July 31, 2006.

Nam Tai's net sales for its third quarter of 2006 was $218.5 million, an increase of 5.1% as compared to $207.9 million in the third quarter of 2005. Operating income for the third quarter of 2006 was $12.4 million, or $0.28 per share (diluted), a decrease of 11.6% as compared to operating income of $14.1 million, or $0.33 per share for the same period last year. Net income for the third quarter of 2006 was $12.1 million, a decrease of 35.7% as compared to $18.8 million in the third quarter of 2005. Both non-GAAP operating income per share (diluted) and non-GAAP earnings per share (diluted) for the third quarter of 2006 were $0.28, a decrease of 20% as compared to $0.35 for each of those non-GAAP measures in the same period last year.

For the nine months ended September 30, 2006, Nam Tai's net sales were $640.5 million, an increase of 16.4% as compared to $550.1 million in the same period last year. Operating income for the first nine months of 2006 was $45.1 million, or $1.03 per share (diluted), an increase of 18.3% as compared with $38.1 million, or $0.89 per share (diluted), in the same period last year. Net Income for the first nine months of 2006 was $43.1 million, or $0.99 per share, an increase of 11.6% as compared to $38.6 million or $0.90 per share in the same period last year.

Ms. Patinda Lei, Nam Tai's Chief Executive Officer and Chief Financial Officer commented, "Despite the challenging business environment, the Company is very much encouraged that its gross profit margins for the third quarter of 2006 improved to 10.2% from 9.7% in the second quarter of 2006. The Company continued to be successful in controlling its selling, general and administrative ("SG&A") expense as well as research and development ("R&D") expenses. Total SG&A and R&D expenses as a percentage of sales decreased to 4.5% in the third quarter of 2006 as compared to 5.4% in the same period last year, which included $0.96 million of severance expenses, or 0.5% as a percentage of net sales, incurred in relation to the restructuring of Nam Tai's Hong Kong subsidiaries in the third quarter of 2005."

The Company's financial position remains strong and net cash provided by operating activities during the third quarter of 2006 was $26.0 million. The Company also had $227.0 million cash on hand even after capital expenditures of $9.1 million made and second quarter dividends of $16.6 million paid to stockholders on July 21, 2006. Moreover, the Company's other financial ratios remain healthy.