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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 20-F
  o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 or
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 2009
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 or
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 For the transition period from  to
 Commission File Number: 001-31583
 
  British Virgin Islands
(Jurisdiction of incorporation or organization)Gushu Industrial Estate, Xixiang,
Baoan, Shenzhen,
Peoples Republic of China
(Address of principal executive offices)
    
    
    
    Kee Wong, Corporate Secretary
Tele: (852) 2341 0273; Fax (852) 2263 1223
E-mail: lkwong@namtai.com.hk
Units 5811-12, 58/F, The Center,
99 Queens Road Central Central Hong Kong
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
     o þ
 o þ
 þ o
 þ (1) o
  Large accelerated o
    
    Accelerated filer þ
    
    None-accelerated filer o
  U.S. GAAP þ
    
    International Financial Reporting Standards as issued by the International Accounting
Standards Board o
    
    Other o
 o o
 o þ
 
 (1)
    
    Interactive data filing is not required of registrant until its Annual Report on Form 20-F
for the year ending December 31, 2010.




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##### 



Table of Contents
 Note Regarding Use of Forward Looking Statements
    
    
    3Financial Statements and Currency Presentation
    
    
    3Introduction
    
    
    3Part I
    
    
    3Item 1. Identity of Directors, Senior Management and Advisors
    
    
    3Item 2. Offer Statistics and Expected Timetable
    
    
    3Item 3. Key Information
    
    
    3Item 4. Information on the Company
    
    
    20Item 4a. Unresolved Staff Comments
    
    
    37Item 5. Operating and Financial Review and Prospects
    
    
    37Item 6. Directors and Senior Management
    
    
    51Item 7. Major Shareholders and Related Party Transactions
    
    
    58Item 8. Financial Information
    
    
    61Item 9. The Listing
    
    
    63Item 10. Additional Information
    
    
    63Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    71Item 12. Description of Securities Other Than Equity Securities
    
    
    73Part II
    
    
    73Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    73Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    73Item 15. Controls and Procedures
    
    
    73Attestation Report of Independent Registered Public Accounting Firm
    
    
    73Report of Independent Registered Public Accounting Firm on Managements Assessment of Internal Control
    
    
    74Item 16. [Reserved]
    
    
    75Item 16 A. Audit Committee Financial Expert
    
    
    75Item 16 B. Code of Ethics
    
    
    75Item 16 C. Principal Accountant Fees and Services
    
    
    75Item 16 D. Exemptions From the Listing Standards For Audit Committees
    
    
    76Item 16 E. Purchases of Equity Securities By the Issuer and Affiliated Purchasers
    
    
    76Item 16 F. Change In Registrants Certifying Accountant
    
    
    76Item 16 G. Corporate Governance
    
    
    76Part III
    
    
    77Item 17. Financial Statements
    
    
    77Item 18. Financial Statements
    
    
    77Index to Consolidated Financial Statements
    
    
    77Report of Independent Registered Public Accounting Firm Moore Stephens
    
    
    F-1Report of Independent Registered Public Accounting Firm Deloitte Touche Tohmatsu
    
    
    F-2Consolidated Statements of Income
    
    
    F-3Consolidated Balance Sheets
    
    
    F-4Consolidated
Statements of Changes in Equity and Comprehensive Income
    
    
    F-5Consolidated Statements of Cash Flows
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-8Schedule 1 Statements of Income
    
    
    F-34Schedule 1 Balance Sheets
    
    
    F-35Schedule 1 Statement of Changes in Shareholders Equity and Comprehensive Income
    
    
    F-36Schedule 1 Statements of Cash Flows
    
    
    F-37Schedule 1 Note to Schedule 1
    
    
    F-38Item 19. Exhibits
    
    
    78Signature
    
    
    80Certification Pursuant to Section 1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    Exhibit 12.1Certification Pursuant to Section 1350, As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    
    Exhibit 12.2Certification Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350,
 As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    
    Exhibit 13.1Consent of Independent Registered Public Accounting Firm - Moore Stephens
    
    Exhibit 15.1Consent of Independent Registered Public Accounting Firm - Deloitte Touche Tohmatsu
    
    Exhibit 15.2EX-4.17EX-4.18EX-12.1EX-12.2EX-13.1EX-15.1EX-15.2
  2




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NOTE REGARDING USE OF FORWARD LOOKING STATEMENTS
  
 FINANCIAL STATEMENTS AND CURRENCY PRESENTATION
  
 INTRODUCTION
  
    
    we, us, our company, our, the Company and Nam Tai refer to Nam Tai
Electronics, Inc. and, in the context of describing our operations, also include our PRC
operating companies;
    
    shares refer to our common shares, $0.01 par value;
    
    China or PRC refers to the Peoples Republic of China, excluding Taiwan, Hong
Kong and Macao;
    
    Hong Kong refers to the Hong Kong Special Administrative Region of the Peoples
Republic of China and HK$ refers to the legal currency of Hong Kong;
    
    Macao refers to the Macao Special Administrative Region of the Peoples Republic of
China, and
    
    all references to Renminbi, RMB or yuan are to the legal currency of China; all
references to U.S. dollars, dollars, $ or US$ are to the legal currency of the
United States.
 Note with respect to our use of Bluetooth: The Bluetooth® word mark and logos are owned by
the Bluetooth SIG, Inc. and any use of such marks by Nam Tai is under license. Other trademarks and
trade names used in this Report, if any, are those of their respective owners.
 
 PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
  
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
  3




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Selected Financial Information
 Year ended December 31,2005
    
    2006
    
    2007
    
    2008
    
    2009(in thousands, except per share data)Consolidated statements of income data:Net sales  third parties
    
    $
    791,042
    
    
    $
    870,174
    
    
    $
    780,822
    
    
    $
    622,852
    
    
    $
    408,137Net sales  related party
    
    
    6,195
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total net sales
    
    
    797,237
    
    
    
    870,174
    
    
    
    780,822
    
    
    
    622,852
    
    
    
    408,137Cost of sales
    
    
    (704,314
    )
    
    
    (783,953
    )
    
    
    (693,804
    )
    
    
    (552,174
    )
    
    
    (367,817
    )Gross profit
    
    
    92,923
    
    
    
    86,221
    
    
    
    87,018
    
    
    
    70,678
    
    
    
    40,320Gain on disposal of asset held for sale
    
    
    
    
    
    
    9,258
    
    
    
    
    
    
    
    
    
    
    
    Operating expenses:General and administrative expenses (1)
    
    
    (28,071
    )
    
    
    (26,203
    )
    
    
    (29,986
    )
    
    
    (29,112
    )
    
    
    (28,393
    )Selling expenses (1)
    
    
    (4,986
    )
    
    
    (4,465
    )
    
    
    (6,564
    )
    
    
    (6,945
    )
    
    
    (5,266
    )Research and development expenses
    
    
    (7,210
    )
    
    
    (7,866
    )
    
    
    (9,798
    )
    
    
    (10,890
    )
    
    
    (6,273
    )Impairment loss on goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,345
    )
    
    
    Losses arising from the judgment to reinstate redeemed shares
    
    
    
    
    
    
    (14,465
    )
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    (40,267
    )
    
    
    (52,999
    )
    
    
    (46,348
    )
    
    
    (64,292
    )
    
    
    (39,932
    )Income from operations
    
    
    52,656
    
    
    
    42,480
    
    
    
    40,670
    
    
    
    6,386
    
    
    
    388Other (expenses) income  net
    
    
    (125
    )
    
    
    (1,265
    )
    
    
    2,219
    
    
    
    6,428
    
    
    
    (256
    )Dividend income received from marketable securities and
investment
    
    
    579
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain on sale of subsidiaries shares
    
    
    10,095
    
    
    
    
    
    
    
    390
    
    
    
    20,206
    
    
    
    Gain on disposal of an affiliated company
    
    
    3,631
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Loss) gain on disposal of marketable securities
    
    
    (3,686
    )
    
    
    
    
    
    
    43,815
    
    
    
    
    
    
    
    Impairment loss on marketable securities
    
    
    (6,525
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Loss on marketable securities arising from split share
structure reform
    
    
    
    
    
    
    (1,869
    )
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    
    3,948
    
    
    
    8,542
    
    
    
    9,163
    
    
    
    6,282
    
    
    
    818Interest expense
    
    
    (438
    )
    
    
    (602
    )
    
    
    (452
    )
    
    
    (356
    )
    
    
    (202
    )Income before income tax expenses and
equity in loss of affiliated companies
    
    
    60,135
    
    
    
    47,286
    
    
    
    95,805
    
    
    
    38,946
    
    
    
    748Income tax expenses
    
    
    (651
    )
    
    
    (377
    )
    
    
    (4,030
    )
    
    
    (2,877
    )
    
    
    (1,283
    )Income (loss) before equity in loss of affiliated companies
    
    
    59,484
    
    
    
    46,909
    
    
    
    91,775
    
    
    
    36,069
    
    
    
    (535
    )Equity in loss of affiliated companies
    
    
    (186
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consolidated
net income (loss)
    
    
    59,298
    
    
    
    46,909
    
    
    
    91,775
    
    
    
    36,069
    
    
    
    (535
    )Net (income)
loss attributable to noncontrolling interests
    
    
    (7,992
    )
    
    
    (6,153
    )
    
    
    (22,272
    )
    
    
    (5,434
    )
    
    
    2,187Net income attributable to Nam Tai shareholders
    
    
    51,306
    
    
    
    40,756
    
    
    
    69,503
    
    
    
    30,635
    
    
    
    1,652Earnings per share:Basic
    
    $
    1.19
    
    
    $
    0.93
    
    
    $
    1.56
    
    
    $
    0.68
    
    
    $
    0.04Diluted
    
    $
    1.19
    
    
    $
    0.93
    
    
    $
    1.55
    
    
    $
    0.68
    
    
    $
    0.04
 At December 31,2005
    
    2006
    
    2007
    
    2008
    
    2009(in thousands, except per share data)Consolidated balance sheets data:Cash and cash equivalents
    
    $
    213,843
    
    
    $
    221,084
    
    
    $
    272,459
    
    
    $
    237,017
    
    
    $
    182,722Fixed
deposits maturing over three months
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,903Working capital (2)
    
    
    234,674
    
    
    
    238,105
    
    
    
    266,306
    
    
    
    239,037
    
    
    
    197,718Land use right and property, plant and equipment, net
    
    
    100,741
    
    
    
    105,394
    
    
    
    98,599
    
    
    
    121,660
    
    
    
    121,406Total assets
    
    
    520,011
    
    
    
    529,235
    
    
    
    544,818
    
    
    
    514,061
    
    
    
    403,924Short-term debt, including current portion of long-term debt
    
    
    9,400
    
    
    
    6,266
    
    
    
    6,570
    
    
    
    8,199
    
    
    
    Long-term debt, less current portion
    
    
    2,850
    
    
    
    1,100
    
    
    
    1,558
    
    
    
    
    
    
    
    Total debt
    
    
    12,250
    
    
    
    7,366
    
    
    
    8,128
    
    
    
    8,199
    
    
    
    Total Nam
Tai shareholders equity (3)
    
    
    310,391
    
    
    
    317,094
    
    
    
    330,181
    
    
    
    322,261
    
    
    
    326,410Common shares
    
    
    435
    
    
    
    438
    
    
    
    448
    
    
    
    448
    
    
    
    448Total dividend per share
    
    
    1.32
    
    
    
    1.52
    
    
    
    0.84
    
    
    
    0.88
    
    
    
    Total number of common shares issued
    
    
    43,506
    
    
    
    43,787
    
    
    
    44,804
    
    
    
    44,804
    
    
    
    44,804Total number of common shares to be issued
    
    
    
    
    
    
    1,017
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    The Companys consolidated statements of income for years prior to 2009, as originally
published, combined general and administrative expenses and selling expenses as a single line
item labeled Selling, general and administrative expenses. In the above presentation of
Selected Financial Data and in the Companys consolidated financial statements included in
this Report, such expenses have been presented separately to conform to the 2009 presentation.(2)
    
    Working Capital represents the excess of current assets over current liabilities(3)
    
    Noncontrolling interests for 2005, 2006, 2007 and 2008 have
been reclassified as equity in accordance with Financial Accounting
Standard Board (FASB) Accounting Standards Codification
(ASC) 810-10-45-16 Consolidated-Overall-Other
Presentation Matter-Noncontrolling Interest in a Subsidiary. 4




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Risk Factors
 We may from time to time make written or oral forward-looking statements. Written
forward-looking statements may appear in this document and other documents filed with the SEC, in
press releases, in reports to shareholders, on our website, and other documents. The Private
Securities Reform Act of 1995 contains a safe harbor for forward-looking statements on which the
Company relies in making such disclosures. In connection with this safe harbor, we are hereby
identifying important factors that could cause actual results to differ materially from those
contained in any forward-looking statements made by us or on our behalf. Any such statements are
qualified by reference to the following cautionary statements.
 We are dependent on a few large customers, the loss of any of which could substantially harm our
business and operating results.
   The continuing global economic weakness has adversely affected our revenues, net income and
financial condition and can be expected to continue to do so until economic conditions improve.
  
    
    the demand for our customers products,
    
    the amount, timing and stability of their orders to us,
    
    the financial strength of our customers and suppliers,
    
    their ability or willingness to do business with us,
    
    our willingness to do business with them,
    
    our suppliers and customers ability to fulfill their obligations to us,
    
    the ability of our customers, our suppliers or us to obtain credit, secure funds or
raise capital, and
    
    the prices at which we can sell our products and services.
  Our quarterly and annual operating results are subject to significant fluctuations as a result of a
wide variety of factors.
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
    
    the timing, cancellation or deferral of orders;
    
    adverse changes in global economic conditions, particularly those affecting the
electronics industry;
    
    the level of capacity utilization of our manufacturing facilities and associated
fixed costs;
    
    the composition of the costs of revenue between materials, labor and manufacturing
overhead;
    
    changes in demand for our products or services;
    
    changes in demand in our customers end markets, which affect the type of product and
related margins;
    
    our customers announcement and introduction of new products or new generations of
products;
    
    the efficiencies we achieve in managing inventories and fixed assets;
    
    the degree to which we are able to utilize our available manufacturing capacity;
    
    long, national official, seasonal breaks in the PRC, such as the Chinese New Year
holidays in our first quarter and the National Day Golden week in our fourth quarter,
during which our ability to manufacture products, obtain components and materials from
suppliers and receive and process orders from customers are adversely affected;
    
    fluctuations in materials costs and availability of materials;
    
    the life cycles of our customers products;
    
    variability in our manufacturing yields;
    
    long lead times and advance financial commitments for our factories and equipment
expenditures;
    
    long lead times and advance financial commitments for components required to complete
anticipated customer orders;
    
    our effectiveness in managing manufacturing processes, including, interruptions or
slowdowns in production and changes in cost and availability of components;
    
    changes in the specific products or quantities our customers
order;
    
    extended payment terms demanded by our major customers which, for competitive
reasons, we choose to accommodate and result in longer periods for us to receive payment
and increase our accounts receivable;
    
    customer insolvencies resulting in bad debt or inventory exposures that are in excess
of our reserves;
    
    charges to our operating results because of impairments to the values of long-lived
assets or goodwill carried on our balance sheet; and
    
    price reductions caused by competitive pressure.
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We face increasing competition, which has had and may continue to have, an adverse effect on our
gross margins.
   
    We may not be able to compete successfully with our competitors, many of which have substantially
greater resources than we do. We will face intense competition when we soon begin large-scale
production of flexible printed circuit, or FPC, boards and FPC subassemblies.
  Product/Service
    
    CompetitorEMS
    
     Celestica, Inc. Flextronics International Ltd. Hon Hai Precision Industry Co., Ltd. Jabil Circuit, Inc Sanmina-SCI CorporationImage capturing devices and their modules
    
     Altus Technology Inc (controlled by Foxconn) Lite-On Technology Corporation Logitech International S.A. The Primax Group
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Product/Service
    
    CompetitorMobile phone accessories
    
     Balda-Thong Fook Solutions Sdn., Bhd. Celestica, Inc. Elcoteq Network Corp. Flextronics International Ltd. Foster Corporation Foxlink Group Merry Electronics Co. Ltd. WKK International (Holdings) Ltd.RF modules
    
     Wavecom SA WKK International (Holdings) Ltd.Liquid crystal display, or LCD, panels
    
     Elec & Eltek International Holdings Limited Truly International Holdings Ltd. Varitronix International Ltd. Yeebo (International) Holdings Ltd.Telecommunication subassemblies and components
    
     Flextronics International Ltd. LG. Philips LCD Co., Ltd. Samsung Electronics Varitronix International Ltd.Consumer electronic products (calculators,
personal organizers and linguistic products)
    
     Computime Limited Inventec Co. Ltd. Kinpo Electronics, Inc. VTech Holdings LimitedFPC boards
    
     Ichia Technologies Inc Nitto Denko (HK) Ltd. NOK Corporation Sony Chemical & Information Device Ltd.
   Cancellations or delays in orders could materially and adversely affect our gross margins and
operating results.
  8




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Our customers face numerous competitive challenges, such as rapid technological change and short
life cycles for their products, which may materially adversely affect their business, and also
ours.
  
 
 
 
 
  Our business has been characterized by a rapidly changing mix of products and customers.
  There may not be a sufficient market for new products that our customers or we develop.
  We must spend substantial amounts to maintain and develop advanced manufacturing processes and
engage additional engineering personnel in order to attract new customers and business.
  
    
    utilization of advances in technology;
    
    development of new or improved manufacturing processes for our customers products;
    
    delivery of efficient and cost-effective services; and
    
    timely completion of the manufacture of new products.
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Our business is capital intensive and the failure to generate sufficient cash could require that we
curtail capital expenditures.
  We generally have no written agreements with suppliers to obtain components and our margins and
operating results could suffer from increases in component prices.
  Our business and operating results would be materially and adversely affected if our suppliers of
needed components fail to meet our needs.
  We may be required to write down our long-lived assets and a significant impairment charge would
adversely affect our operating results.
  The PRCs labor law could penalize Nam Tai if it needs to make additional workforce reductions.
  Adverse market conditions in the electronics industry could reduce our future sales and earnings
per share.
  10




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We are exposed to impact of global business trends in the mobile phone industry, which could result
in even lower gross margins on the mobile phone components and subassemblies we manufacture.
  Our customers are dependent on shipping companies for delivery of our products and interruptions to
shipping could materially and adversely affect our business and operating results.
  Our products are sold internationally and the effect of business, legal and political risks
associated with international operations could significantly harm us.
  
    
    changes in economic and political conditions and in governmental policies;
    
    changes in international and domestic customs regulations;
    
    wars, civil unrest, acts of terrorism and other conflicts;
    
    changes in tariffs, trade restrictions, trade agreements and taxation;
    
    limitations on the repatriation of funds because of foreign exchange controls;
    
    exposure to political and financial instability;
    
    currency exchange losses, collection difficulties or other country-specific
losses;
    
    exposure to fluctuations in the value of local currencies;
    
    changes in value-added tax, or VAT, reimbursement;
    
    imposition of currency exchange controls; and
    
    delays from customs brokers or government agencies.
  Our operating results could be negatively impacted by seasonality.
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Our results could be adversely affected with intensifying environmental regulations.
  i.e.
 Power shortages in China could affect our business.
  Our insurance coverage may not be sufficient to cover the risks related to our operations and
losses.
  We could become involved in intellectual property disputes.
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We depend on our executive officers and skilled personnel.
  The PRC legal system has inherent uncertainties that could materially and adversely impact our
ability to enforce the agreements governing our factories and to do business.
  Political or trade controversies between China and the United States could harm our operating
results or depress our stock price.
  The economy of China has been experiencing significant growth, leading to some inflation. If the
government tries to control inflation by traditional means of monetary policy or returns to planned
economic techniques, our business will suffer a reduction in sales growth and expansion
opportunities.
  Changes to PRC tax laws and heightened efforts by the Chinas tax authorities to increase revenues
have subjected us to greater taxes.
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We appear to have been a passive foreign investment company for
2009 and based on our current operations and market conditions, we may be a passive foreign
investment company for 2010, which could result in adverse U.S. federal income tax consequences to
some U.S. investors.
    Changes in foreign exchange regulations of China could adversely affect our operating results.
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Changes in currency exchange rates involving the Japanese yen or RMB have and could continue to
significantly affect our financial results.
  
    15




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(1)
    
    RMB (yuan) to US dollar data presented in this chart were derived from the historical
currency converter available at http://forex-history.net.(2)
    
    If the end of a quarter fell on a Saturday or Sunday, datum is provided as of the previous
Friday.    We are exposed to intangible asset risk
  16




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The market price of our shares will likely be subject to substantial price and volume fluctuations.
   The concentration of share ownership in our senior management allows them to control or
substantially influence the outcome of matters requiring shareholder approval.
  Implementation of a new enterprise resource planning system could disrupt our operations and cause
unanticipated increases in our costs.
    Regulatory initiatives in the United States, such as the Sarbanes-Oxley Act has increased, and may
continue to increase the time and costs of certain activities; and any further changes would likely
further increase our costs.
  Due to inherent limitations, there can be no assurance that our system of disclosure and internal
controls and procedures will be successful in preventing all errors or fraud, or in informing
management of all material information in a timely manner.
  17




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##### Table of Contents



There are inherent uncertainties involved in estimates, judgments and assumptions used in the
preparation of financial statements in accordance with U.S. GAAP. Any changes in estimates,
judgments and assumptions could have a material adverse effect on our business, financial position
and results of operations.
  It may be difficult to serve us with legal process or enforce judgments against our management or
us.
   
    
    the judgment is for a liquidated amount in a civil matter;
    
    the judgment is final and conclusive;
    
    the judgment is not, directly or indirectly, for the payment of foreign taxes,
penalties, fines or charges of a like nature (in this regard, a Hong Kong court is unlikely to accept a judgment for an amount obtained by
doubling, trebling or otherwise multiplying a sum assessed as compensation for the loss
or damage sustained by the person in whose favor the judgment was given);
    
    the judgment was not obtained by actual or constructive fraud or duress;
    
    the foreign court has taken jurisdiction on grounds that are recognized by the common
law rules as to conflict of laws in Hong Kong or the British Virgin Islands;
    
    the proceedings in which the judgment was obtained were not contrary to natural
justice (i.e.the concept of fair adjudication);
    
    the proceedings in which the judgment was obtained, the judgment itself and the
enforcement of the judgment are not contrary to the public policy of Hong Kong or the
British Virgin Islands;
 18




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##### Table of Contents




    
    the person against whom the judgment is given is subject to the jurisdiction of the
Hong Kong or the British Virgin Islands court; and
    
    the judgment is not on a claim for contribution in respect of damages awarded by a
judgment, which does not satisfy the criteria stated previously.
  Future issuances of preference shares could materially and adversely affect the holders of our
common shares or delay or prevent a change of control.
  We incurred substantial expenses and costs in privatizing Nam Tai Electronic & Electrical Products
Limited. It may require a number of years to realize the benefits from owning 100 percent of
NTEEP.
 i.e.,
  Our status as a foreign private issuer in the United States exempts us from certain of the
reporting requirements under the Securities Exchange Act of 1934 and corporate governance standards
of the New York Stock Exchange, or NYSE limiting the protections and information afforded to
investors.
  
    
    the rules under the Securities Exchange Act of 1934 requiring the filing with the SEC
of quarterly reports on Form 10-Q, current reports on Form 8-K or annual reports on Form
10-K;
    
    the sections of the Securities Exchange Act of 1934 regulating the solicitation of
proxies, consents or authorizations in respect of a security registered under the
Securities Exchange Act of 1934 or disclosures required in a proxy statement in
accordance with rules therefor promulgated under the Securities Exchange Act of 1934;
    
    the provisions of Regulation FD aimed at preventing issuers from making selective
disclosures of material information; and
    
    the sections of the Securities Exchange Act of 1934 requiring insiders to file public
reports of their stock ownership and trading activities and establishing insider
liability for profits realized from any short-swing trading transaction (i.e.a
purchase and sale, or sale and purchase, of the issuers equity securities within less
than six months).
   19




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##### Table of Contents



We have determined not to pay dividends in 2010 and may not pay dividends in the future.
  Payment of dividends by our subsidiaries in the PRC to our subsidiaries outside of the PRC and to
us, as the ultimate parent, is subject to restrictions under PRC law. If we determine to resume our
payment of dividends to our shareholders, the PRC tax law could force us to reduce the amount of
dividends we have historically paid to our shareholders or possibly eliminate our ability to ever
pay them again.
   
 ITEM 4. INFORMATION ON THE COMPANY
 Corporate Information
  Major Events during 2009 to Date
 Developments in Planned Expansion
  20




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##### Table of Contents



2009 Privatization of NTEEP
     Organizational Structure
 .
 Structure at December 31, 2009
  21




---



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22




---



##### Table of Contents



Restructuring in Process
   23




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24




---



##### Table of Contents



Capital Expenditures
  
  
    
    $23.7 million for new factory construction in Wuxi;
    
    $0.5 million for machinery mainly used for production of LCD modules;
    
    $0.8 million for other capital equipment.
  
    
    $18.5 million for new factory construction in Wuxi;
    
    $3.6 million for machinery and system improvements for our LCD factory;
    
    $1.4 million for a new enterprise resource planning system; and
    
    $3.9 million for other capital equipment.
  
    
    $4.8 million for machinery used mainly for bonding and testing;
    
    $4.0 million for machinery used mainly for LCD products;
    
    $2.4 million for project of FPC board manufacturing in existing site; and
    
    $2.6 million for other capital equipment.
  
    
    $3.2 million for machinery used mainly for production of LCD and FPC Modules;
    
    $0.9 million for leasehold improvement regarding merge of two subsidiaries; and
    
    $0.3 million for other capital equipment.
  25




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##### Table of Contents



Business Overview
  Our Customers
  Year ended December 312007
    
    2008
    
    2009Epson Imaging Devices Corporation
    
    
    15.9
    %
    
    
    16.5
    %
    
    
    23.0
    %Sharp Corporation
    
    
    20.2
    %
    
    
    15.3
    %
    
    
    17.9
    %Hikari Alphax Co., Ltd
    
    
    *
    
    
    
    *
    
    
    
    12.2
    %Sony Computer Entertainment Europe Ltd.
    
    
    *
    
    
    
    15.4
    %
    
    
    10.2
    %Sony Ericsson Mobile Communications International AB
    
    
    *
    
    
    
    10.5
    %
    
    
    *GN Netcom
    
    
    10.8
    %
    
    
    *
    
    
    
    *
 
 *
    
    Less than 10% of our total net sales during the year indicated.  Customer
    
    ProductsEpson Imaging Devices Corporation)
    
    LCD modules for cellular phones and FPC subassembliesGN Netcom
    
    Headset accessory containing Bluetooth wireless technologyHikari Alphax Co., Ltd.
    
    LCD modulesRyoyo Electro Hong Kong Limited
    
    LCD modules and panelsSharp Corporation
    
    FPC subassemblies, calculators, PDAs and dictionariesSony Computer Entertainment Europe Ltd.
    
    Home entertainment productsSony Ericsson Mobile Communications AB
    
    Mobile phone digital camera accessories, headset
accessory containing Bluetooth wireless technology and
flashlight for mobile phoneTech-Pro (Shanghai) Computer Ltd.
    
    CMOS sensor modules for notebook computerTexas Instruments Incorporated
    
    CalculatorsVtech Communications Ltd.
    
    LCD modules
   26




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##### Table of Contents



Our Products
  Year ended December 31,2007
    
    2008
    
    2009Dollars
    
    Percent
    
    Dollars
    
    Percent
    
    Dollars
    
    PercentCECP
    
    
    283,757
    
    
    
    36
    
    
    
    271,365
    
    
    
    44
    
    
    
    116,063
    
    
    
    28TCA
    
    
    413,198
    
    
    
    53
    
    
    
    274,953
    
    
    
    44
    
    
    
    222,959
    
    
    
    55LCDP
    
    
    83,867
    
    
    
    11
    
    
    
    76,534
    
    
    
    12
    
    
    
    69,115
    
    
    
    17Total
    
    
    780,822
    
    
    
    100
    
    
    
    622,852
    
    
    
    100
    
    
    
    408,137
    
    
    
    100
  Consumer Electronic and Communication Products
  
    
    Mobile phone accessories such as headsets containing Bluetooth wireless technology,
snap-on portable music speaker, phone cradle, snap-on FM radio adaptors, and snap-on GPS
adaptors;
    
    Entertainment devices such as USB web cam for interactive games, USB microphone and
converter box Karaoke, and a buzzer device for quiz games both in wire, and wireless
design with an infrared solution;
    
    Educational products such as digital pens, calculators and electronic dictionaries;
and
    
    Optical devices such as CMOS imaging sensor modules for notebook computers, portable
media players and recording cameras for the automotive industry.
 Telecommunication Component Assembly
  
    
    Color and monochrome LCD modules to display information as part of telecommunication
products such as PDA phone, smart phone and traditional mobile phones and telephone
systems. These modules are also used in most other hand-held consumer electronic
devices, such as electronic games, MP3, Automotive products and digital cameras;
    
    RF modules for integration into mobile phones. RF modules are partially finished
circuits that can be incorporated into larger products or components. Each module
includes receivers, transmitters, and transceivers, and can be manufactured for use in
most other hand-held consumer electronic products, such as PDAs, laptop computers and
other products with wireless connectivity;
    
    DAB modules are digital audio broadcasting components that are used in digital radio
products such as home tuners, kitchen radios, in-car receivers, CD players, clock
radios, boom boxes, midi-systems and handheld portable devices;
    
    FPC subassemblies for integration into various LCD modules and electronic devices;
    
    FPC board manufacturing for vertical integration to FPC subassembly business, this
could be used for mobile phone, PDAs, office automation, laptop computers and other
products which require a portable product design;
    
    Front light panels for handheld video game devices;
    
    Back light panels for handheld video game devices; and
    
    1.9 high-frequency cordless telephones and home feature phones.
 LCD Products
  27




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##### Table of Contents




    
    Super thin (0.3-0.5mm glass substrates) LCD panels for application in watches and
medical instruments;
    
    Irregular shaped LCD panels for applications in telecommunications, automotives ,
white goods and industrial applications;
    
    Super high contrast monochrome vertical aligned Twisted Nematic LCD for applications
in automotive parts and major appliances;
    
    Black masked color LCD for applications in car audio systems;
    
    Wide temperature monochrome dye doped enhanced Super-Twisted Nematic (STN) LCD for
application in major appliances;
    
    1.5 Color and monochrome STN LCD modules for application of hand held products, such
as cordless phones;
    
    5-7 monochrome high resolution STN LCD modules with touch screens for applications
of VoIP phones, medical instruments and major appliances such as white goods; and
    
    8.5 TFT color LCD modules for office automation applications, i.e.varied computer
machinery used to digitally create, collect, store, manipulate, and relay office
information needed for accomplishing basic tasks and goals.
 Our Manufacturing and Assembly Capabilities
  Chip On Film, or COF
    
    is an assembly method for
bonding integrated circuit
chips and other components
onto a flexible printed
circuit. This process
allows for greater
compression of the size of
a product when assembled
enabling the production
and miniaturization of
small form factor devices
like cellular phones,
PDAs, digital cameras and
notebook PCs. As of
December 31, 2009, we had
16 COF machines. These
machines connect the bump
of large scale integrated,
or LSI, driver onto FPC
pattern with anisotropic
conductive film, or ACF.
These COF machines have
the ability to pitch fine
to 38 micrometers and a
total production capacity
of up to 4,400,000 chips
per month.Chip On Glass, or COG
    
    is a process that connects
integrated circuits
directly to LCD panels
without the need for wire
bonding. We apply this
technology to produce
advanced LCD modules for
high-end electronic
products, such as cellular
phones and PDAs. As of
December 31, 2009, we had
23 COG lines in our
principal manufacturing
facilities. These machines
provide an LCD of
dimension of up to 200
millimeters (length)x 150
(width)x 2.2 (height), a
process time of five
seconds per chip, a pin
pitch fine to 38
micrometers and a total
production capacity of up
to 4,200,000 chips per
month. During 2005, our
subsidiary, Jetup
Electronic (Shenzhen) Co.
Ltd. (Jetup) also
started manufacturing COG
LCD modules. As of
December 31, 2009, Jetup
had 18 COG lines and is
capable of bonding 5
million units of COG LCD
modules a month. They are
able to bond LCD panels up
to sizes of 200
millimeters x 200
millimeters x 2.2
millimeters thick, with an
accuracy of five microns
tolerance, in a cycle time
of 12-15 seconds per
piece.Chip On Board, or COB
    
    is a technology that
utilizes wire bonding to
connect large-scale
integrated circuits
directly to printed
circuit boards. As of
December 31, 2009, we had
53COB aluminum bonding
machines which provide a
high speed chip bonding
time of 0.25 second per 2
millimeters wire, a bond
pad fine to 75 micrometers
and a total production
capacity of up to
3,829,000 (150
wires/board) per month. We
use COB aluminum bonding
in the assembly of
consumer products such as
digital pen, calculators,
electronic dictionaries,
audio products. We also
had 3COB gold ball bonding
machines which provide a
high speed chip bonding
time of 0.072 second per 2
millimeters wire, a bond
pad fine to 50 micrometers
and a total production
capacity of up to 500,000
(150 wires/board) per
month. We use COB gold
ball bonding in the CMOS
camera module, which use
in USB camera, notebook
computer, mobile phone and
digital pen.
 28




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##### Table of Contents



Outer Lead Bonding, or OLB
    
    is an advanced technology
used to connect PCBs and
large-scale integrated
circuits with a large
number of connectors. We
use this technology to
manufacture complex
miniaturized products,
such as high-memory PDAs.
As of December 31, 2009,
we had three OLB machines.
The machines include
multi-pinned tape carrier
packaged large scale
integrated circuit, or TCP
LSIC, bonding which is up
to 280 pins, which also
provide ultra thin
assembly with module
thickness to around one
millimeter and high
accuracy bonding with pin
pitch to 100 micrometers.
The total production
capacity is 12,000 units
per month.Tape Automated Bonding With Anisotropic
Conductive Film, or TAB With ACF
    
    is an advanced heat
sealing technology that
connects a liquid crystal
display component with an
integrated circuit in very
small LCD modules, such as
those used in cellular
phones and pagers. As of
December 31, 2009, we had
28 systems of TAB with ACF
machines. The machines
provide process time of 10
to 25 seconds per
component, a pin pitch
fine up to 150 micrometers
and a total production
capacity of up to
5,876,000 components per
month. Since 2005, Jetup
also started manufacturing
TAB LCD modules. As of
December 31, 2009, Jetup
had four TAB lines and is
capable of bonding
2,000,000 pieces of TAB
LCD modules a month. They
are able to bond LCD
panels up to sizes of 120
millimeters x 120
millimeters x 2.2
millimeters thick, with an
accuracy of 10 microns
tolerance in a cycle time
of 20-25 seconds per
piece.Fine Pitch Heat Seal Technology, or FPHS
Technology
    
    allows us to connect LCD
displays to PCBs produced
by COB and outer lead
bonding that enables very
thin connections. This
method is highly
specialized and is used in
the production of finished
products such as PDAs. As
of December 31, 2009, we
had eight machines
utilizing FPHS technology.
The machines provide a pin
pitch fine to 260
micrometers and a total
production capacity of up
to 268,000 units per
month.Surface Mount Technology, or SMT
    
    is a process by which
electronic components are
mounted directly on both
sides of a printed circuit
board, increasing board
capacity, facilitating
product miniaturization
and enabling advanced
automation of production.
We use SMT for products
such as mobile display
module and electronic
linguistic devices. As of
December 31, 2009, we had
37 SMT productions lines.
The production time per
chip ranges from 0.055
second per chip to 0.8
second per chip and high
precision ranging from
+/-0.05 millimeter to
+/-0.1 millimeter. The
components size ranges
from 0.4 millimeter
(length)x 0.2 millimeter
(width) to 55 millimeters
(length)x 55 millimeters
(width). Ball grid array,
or BGA, ball pitch is 0.4
millimeter and ball
diameter is 0.2
millimeter. Flip Chip, our
smallest lead/bump pitch,
is 250/240UM and our
smallest components
spacing is 0.15
micrometers. The total
production capacity is
over 1 billion resistor
capacitor chips per month.Super-Twisted Nematic, or STN, Displays
    
    is a type of monochrome
passive matrix
LCD capable of
providing higher
information content to
display systems and are
typically found in
applications such as
cordless phones, mobile
phones, MP3 players,
pocket games and PDAs. Our
Jetup began producing STN
LCDs in 2002. Since 2005,
our Jetup upgraded its two
existing twisted nematic,
or TN type, LCD lines to
STN LCD lines. TN displays
rotate the director of the
liquid crystal by 90°, but
STN LCD displays employ up
to a 270°rotation. This
extra rotation gives the
crystal a much steeper
voltage-brightness
response curve and also
widens the angle at which
the display can be viewed
before losing much
contrast. As of December
31, 2009, our Jetup was
using three automated STN
lines capable of producing
both TN and STN type LCDs
with capacity of 150,000
pairs of glass (each sheet
of glass of 360
millimeters x 400
millimeters in size)
panels per month.
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##### Table of Contents



LCD Back-End
    
    is a main manufacturing
process for LCD panels,
and is regarded as part of
the process for its
finished product LCD
modules. It includes the
precise pure water
cleaning process, scribing
of LCD glass, liquid
crystal insertion, sealing
process and breaking
process, then turns the
LCD mother glass into LCD
panels. Our machines can
cope with 0.2millimeters +
0.2millimeters LCD mother
glass up to dimension 550
millimeters x 670
millimeters, with cutting
tolerance +/-0.1
millimeters.
   FPC boards and FPC Subassemblies
 Flexible Printed Circuit Subassemblies.
 Flexible Printed Circuits
 FPC Boards.
  Quality Control
  30




---



##### Table of Contents



Our Suppliers
   
    
    Integrated circuits or chips, most of which we purchase presently from Cambridge
Silicon Radio Plc Ltd., Qualcomm CDMA Technologies Asia Pacific Pte. Ltd., Toshiba
Electronics (Asia) Ltd., Ricoh Company Ltd, ATI
 31




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##### Table of Contents



Technologies Ltd, Rohm Electronics (HK)
Co., Ltd., Samsung Electronics., Ltd., Sharp Electronics (M) SDN.BHD and certain of
their affiliates;
    
    LCD panels, which are available from many manufacturers. Since 2007, we have
purchased LCD panels from Suzhou Epson Co. Ltd., Safaring Technology Co. Ltd., Toshiba
Matsushita Display Co. Ltd., Shantou Goworld Display (Plant II) Co. Ltd., and VBest
Electronics Ltd.;
    
    FPC boards, which consist of copper conductive patterns that have been etched or
printed while affixed to flexible substrate materials such as polyimide or polyester,
are mainly used to provide connections for electronic components and as a substrate to
support these electronic devices. Since 2007, we have purchased FPC boards mainly from
Sony Chemical Co., Ltd., Nitto Denko (HK) Co. Ltd. and NOK Mektec Corp. Ltd.;
    
    Light-emitting diodes, or LEDs, are semiconductor devices that emit incoherent
narrow-spectrum light when electrically biased in the forward direction. This effect is
a form of electroluminescence. LEDs are small extended sources with extra optics added
to the chip, which emit a complex intensity spatial distribution. We purchase LEDs
primarily from Nichia Corporation, Everlight Electronics Co., Ltd.; and
    
    CMOS imaging sensors, which we purchase mainly from Omnivision Technologies Inc.,
Micron Technology Inc. and Magnachip Semiconductor Ltd. Solar cells and batteries, which
are standard off-the-shelf items that we generally purchase in Hong Kong from agents
of Japanese manufacturers or directly from companies in China; various mechanical
components such as plastic parts, cables, rubber keypads, PCBs, indium tin oxide, or
ITO, glass used in the production of LCD panels, and packaging materials from various
local suppliers in China; and various acoustic components, which we mainly sourced from
Wanstonic Electronics Ltd, Yinpin Electronics (SZ) Co. Ltd., Goertek Technology Co.
Ltd., Shandong Gettop Acoustic Co. Ltd., Vansonic Enterprise co. Ltd., where the
manufacturing base is principally in China.
     Production Scheduling
   32




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##### Table of Contents



Sales and Marketing
   Seasonality
   Transportation
  Competition
  33




---



##### Table of Contents



Product/Service
    
    CompetitorEMS
    
       Celestica, Inc.    Flextronics International Ltd.    Hon Hai Precision Industry Co., Ltd.    Jabil Circuit, Inc    Sanmina-SCI Corporation    Altus Technology Inc (controlled by Foxconn)    Lite-On Technology CorporationImage capturing devices and their modules
    
        Logitech International S.A.    The Primax GroupMobile phone accessories
    
        Balda-Thong Fook Solutions Sdn., Bhd.    Celestica, Inc.    Elcoteq Network Corp.    Flextronics International Ltd.    Foster Corporation    Foxlink Group    Merry Electronics Co. Ltd.    WKK International (Holdings) Ltd.RF modules
    
        Wavecom SA    WKK International (Holdings) Ltd.Liquid crystal display, or LCD, panels
    
        Elec & Eltek International Holdings Limited    Truly International Holdings Ltd.    Varitronix International Ltd.    Yeebo (International) Holdings Ltd.Telecommunication subassemblies and components
    
        Flextronics International Ltd.    LG. Philips LCD Co., Ltd.    Samsung Electronics    Varitronix International Ltd.Consumer electronic products (calculators,
personal organizers and linguistic products)
    
        Computime Limited    Inventec Co. Ltd.    Kinpo Electronics, Inc.    VTech Holdings LimitedFPC boards
    
        Ichia Technologies Inc    Nitto Denko (HK) Ltd.    NOK Corporation    Sony Chemical & Information Device Ltd.
   Research and Development
  34




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##### Table of Contents



Patents, Licenses and Trademarks
  Property, Plant and Equipment
  ApproximateSquare
    
    
    
    
    
    Owned(1) or leaseLocation
    
    Footage
    
    Principal or Presently Contemplated Use
    
    expiration dateHong Kong
    
    
    3,760
    
    
    Administration
    
    
    2011Shenzhen, China
    
    
    557,835
    
    
    Principal manufacturing facilities
    
    
    2043/2049
    (2)87,460
    
    
    Administration
    
    
    2043/2049
    (2)350,585
    
    
    Dormitories
    
    
    2043/2049
    (2)41,530
    
    
    Cafeteria
    
    
    204333,825
    
    
    Recreational
    
    
    2049Other existing facilitiesShenzhen, China
    
    
    383,550
    
    
    Manufacturing LCD panels and modules
    
    
    201232,000
    
    
    Administration231,260
    
    
    Dormitories22,260
    
    
    Cafeteria14,550
    
    
    RecreationalWuxi,
Jiangsu Province, China
    
    
    470,360
    
    
    FPC boards and subassemblies, LCD
modules and other products (3)
    
    
    2056Planned new manufacturing facilitiesWuxi, Jiangsu Province, China (a second parcel of land)
    
    
    515,410
    
    
    LCD modules and other
products (4)
    
    
    2056Guangming, Shenzhen, China
    
    
    1,270,160
    
    
    LCD modules and other products (4)
    
    
    2057
 
 (1)
    
    Only the PRC government and peasant collectives may own land in China. Our principal
manufacturing facilities are located on land in which we have entered into a land lease
agreement with the PRC government that gives us the right to use the land for 50 years.
Similarly, the lands which we have acquired in Wuxi and Guangming Shenzhen will be by 50-year
land lease. Our understanding of the practice as it exists today; at the expiration of the
land lease, we may be given the right to renew the lease. For our other facilities, we have
entered into factory building lease agreements with peasant collectives or other companies for
10 years or less.(2)
    
    Our principal manufacturing facilities occupy two parcels of land with 50-year land leases
that we acquired in 1993 and 1999, respectively.(3)
    
    Construction was completed in 2009 and we currently expect to begin mass production at this
factory by the end of the first half of 2010.(4)
    
    Raw land. Because of the current economic global downturn, our current plan is to postpone
construction on these parcels until business conditions improve to a point when believe that
demand for our products justifies construction of additional facilities. Hong Kong
  35




---



##### Table of Contents



Shenzhen, China
 Principal Manufacturing Facilities
  
    
    a five-story factory with approximately 138,000 square feet of production facilities,
including one floor for assembling, one floor of office space, one floor for warehouse
use and two floors of class thousand clean room facilities, totaling approximately 626,000 square feet of manufacturing space, when
construction was completed in October 2002;
    
    an additional factory, consisting of approximately 265,000 square feet of space,
completing construction in December 2004 on vacant land of approximately 280,000 square
feet (approximately 6.5 acres) bordering on our existing facilities that we purchased in
July 1999, and
    
    two additional blocks of dormitories , which we completed during 2005.
  LCD Factory
  Wuxi Factory
  Recently Closed Facilities
   Future Expansion
  36




---



##### Table of Contents



ITEM 4A. UNRESOLVED STAFF COMMENTS
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
  Operating Results
 Overview
   Net Sales and Cost of Sales
   Gross Margins
   37




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##### Table of Contents



Income Taxes
       Rate under EIT
    
    Rate under EITfor enterprises previously
    
    for enterprises previouslyTax Year
    
    subject to 15% tax rate
    
    subject to 24% tax rate2009
    
    
    20
    %
    
    
    25
    %2010
    
    
    22
    %
    
    
    25
    %2011
    
    
    24
    %
    
    
    25
    %2012
    
    
    25
    %
    
    
    25
    %
  38




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##### Table of Contents



Year Ended December 31,2007
    
    2008
    
    2009Applicable statutory tax rates
    
    
    15
    %
    
    
    18
    %
    
    
    20
    %Effect of different between Hong Kong and PRC tax rates applied to Hong Kong income
    
    
    
    
    
    
    
    
    
    
    65
    %Effect of
tax holidays and tax incentives
    
    
    (4
    )%
    
    
    
    
    
    
    Effect of change in tax law
    
    
    (3
    )%
    
    
    (1
    )%
    
    
    (49
    )%Change in valuation allowance
    
    
    
    
    
    
    3
    %
    
    
    (37
    )%Deferred tax
liability on withholding tax on undistributed profits of PRC subsidiaries
    
    
    
    
    
    
    2
    %
    
    
    49
    %Effect of loss/income for which no income tax benefit/expense is receivable/payable
    
    
    (4
    )%
    
    
    (19
    )%
    
    
    102
    %Other items
    
    
    
    
    
    
    4
    %
    
    
    22
    %Effective tax rates
    
    
    4
    %
    
    
    7
    %
    
    
    172
    %
 Strategic Investments
  Critical Accounting Policies and Estimates
   Allowance for doubtful accounts
   Impairment of long-lived assets and goodwill
   39




---



##### Table of Contents



Property, Plant and Equipment
    Accruals and provisions for loss contingencies
  Workforce Reduction in 2009
   Summary of Results
  40




---



##### Table of Contents



Year Ended December 31,
    
    
    % increase/(decrease)2007
    
    
    2008
    
    
    2009
    
    
    2008 vs. 2007
    
    
    2009 vs.2008Net sales
    
    $
    780,822
    
    
    $
    622,852
    
    
    $
    408,137
    
    
    
    (20.2
    )%
    
    
    (34.5
    )%Gross profit
    
    
    87,018
    
    
    
    70,678
    
    
    
    40,320
    
    
    
    (18.8
    )
    
    
    (43.0
    )Operating income
    
    
    40,670
    
    
    
    6,386
    
    
    
    388
    
    
    
    (84.3
    )
    
    
    (93.9
    )Net income
attributable to Nam Tai shareholders
    
    
    69,503
    
    
    
    30,635
    
    
    
    1,652
    
    
    
    (55.9
    )
    
    
    (94.6
    )Basic earnings per share
    
    
    1.56
    
    
    
    0.68
    
    
    
    0.04
    
    
    
    (56.4
    )
    
    
    (94.1
    )Diluted earnings per share
    
    
    1.55
    
    
    
    0.68
    
    
    
    0.04
    
    
    
    (56.1
    )
    
    
    (94.1
    )
 Key Performance Indicators
  2008
    
    
    2009March 31
    
    
    June 30
    
    
    Sept. 30
    
    
    Dec. 31
    
    
    March 31
    
    
    June 30
    
    
    Sept. 30
    
    
    Dec. 31Days in:Sales cycle(1)
    
    
    20
    
    
    
    10
    
    
    
    17
    
    
    
    14
    
    
    
    15
    
    
    
    13
    
    
    
    15
    
    
    
    9Inventory turnover(2)
    
    
    20
    
    
    
    16
    
    
    
    23
    
    
    
    18
    
    
    
    16
    
    
    
    16
    
    
    
    14
    
    
    
    16Accounts receivable(3)
    
    
    56
    
    
    
    50
    
    
    
    75
    
    
    
    61
    
    
    
    52
    
    
    
    59
    
    
    
    63
    
    
    
    52Accounts payable(4)
    
    
    56
    
    
    
    56
    
    
    
    81
    
    
    
    65
    
    
    
    53
    
    
    
    62
    
    
    
    62
    
    
    
    59
 March 31
    
    
    June 30
    
    
    September 30
    
    
    December 312008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009Days in:Sales cycle(1)
    
    
    20
    
    
    
    15
    
    
    
    10
    
    
    
    13
    
    
    
    17
    
    
    
    15
    
    
    
    14
    
    
    
    9Inventory turnover(2)
    
    
    20
    
    
    
    16
    
    
    
    16
    
    
    
    16
    
    
    
    23
    
    
    
    14
    
    
    
    18
    
    
    
    16Accounts receivable(3)
    
    
    56
    
    
    
    52
    
    
    
    50
    
    
    
    59
    
    
    
    75
    
    
    
    63
    
    
    
    61
    
    
    
    52Accounts payable(4)
    
    
    56
    
    
    
    53
    
    
    
    56
    
    
    
    62
    
    
    
    81
    
    
    
    62
    
    
    
    65
    
    
    
    59
 
 (1)
    
    Sales cycle is calculated as the sum of days in accounts receivable and days in
inventory, less the days in accounts payable.(2)
    
    Inventory turnover is calculated as the ratio of inventory, net, at period end divided by
cumulative year to date average daily net cost of sales and multiplied by the cumulative
number of days.(3)
    
    Days in accounts receivable is calculated as the ratio of accounts receivable, net, at
period end divided by cumulative year to date average daily net sales and multiplied by the
cumulative number of days.(4)
    
    Days in accounts payable is calculated as the ratio of accounts payable, net, at period end
divided by cumulative year to date average daily net cost of sales and multiplied by the
cumulative number of days. 41




---



##### Table of Contents



Results of Operations
  Year Ended December 31,2007
    
    2008
    
    2009Net Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    (88.9
    )
    
    
    (88.7
    )
    
    
    (90.1
    )Gross profit
    
    
    11.1
    
    
    
    11.3
    
    
    
    9.9General and administrative expenses
    
    
    (3.9
    )
    
    
    (4.7
    )
    
    
    (6.9
    )Selling expenses
    
    
    (0.8
    )
    
    
    (1.1
    )
    
    
    (1.3
    )Research and development expenses
    
    
    (1.2
    )
    
    
    (1.7
    )
    
    
    (1.6
    )Impairment loss on goodwill
    
    
    
    
    
    
    (2.8
    )
    
    
    Operating income
    
    
    5.2
    
    
    
    1.0
    
    
    
    0.1Other income (expense), net
    
    
    0.3
    
    
    
    1.1
    
    
    
    (0.1
    )Gain on sale of subsidiaries shares
    
    
    0.1
    
    
    
    3.2
    
    
    
    Gain on disposal of marketable securities
    
    
    5.6
    
    
    
    
    
    
    
    Interest income
    
    
    1.2
    
    
    
    1.1
    
    
    
    0.2Interest expense
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    Income before income taxes
    
    
    12.3
    
    
    
    6.3
    
    
    
    0.2Income taxes
    
    
    (0.5
    )
    
    
    (0.5
    )
    
    
    (0.3
    )Consolidated
net income
(loss)
    
    
    11.8
    
    
    
    5.8
    
    
    
    (0.1
    )Net (income) loss attributable to noncontrolling interests
    
    
    (2.9
    )
    
    
    (0.9
    )
    
    
    0.5Net income attributable to Nam Tai shareholders
    
    
    8.9
    %
    
    
    4.9
    %
    
    
    0.4
    %
 Year
Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Net Sales.
 Year ended December 31,2008
    
    
    2009
    
    
    2009 vs. 2008Dollars
    
    
    
    
    
    
    Dollars(in thousands)
    
    
    Percent
    
    
    (in thousands)
    
    
    Percent
    
    
    PercentCECP
    
    $
    271,365
    
    
    
    44
    %
    
    $
    116,063
    
    
    
    28
    %
    
    
    (57.2)
    %TCA
    
    
    274,953
    
    
    
    44
    
    
    
    222,959
    
    
    
    55
    
    
    
    (18.9)
    %LCDP
    
    
    76,534
    
    
    
    12
    
    
    
    69,115
    
    
    
    17
    
    
    
    (9.7)
    %Total
    
    $
    622,852
    
    
    
    100
    %
    
    $
    408,137
    
    
    
    100
    %
    
    
    (34.5)
    %
    42




---



##### Table of Contents



Gross Profit.
 General and Administrative Expenses.
 Selling Expenses.
 Research and Development Expenses.
 Impairment loss on goodwill.
 Other (Expenses) Income, Net.
 Gain on Sale of Subsidiaries Shares
 Interest Income.
 Interest
Expense
 Income Taxes
 Net Loss Attributable to Noncontrolling Interests
 Net Income Attributable to Nam Tai Shareholders.
 Year ended December 31,2007
    
    
    2008
    
    
    2009Dollars
    
    
    
    
    
    
    Dollars
    
    
    
    
    
    
    Dollars(in millions)
    
    
    Percent
    
    
    (in millions)
    
    
    Percent
    
    
    (in millions)
    
    
    PercentCECP
    
    $
    54.5
    
    
    
    78
    %
    
    $
    27.3
    
    
    
    89
    %
    
    $
    6.7
    
    
    
    394
    %TCA
    
    
    16.0
    
    
    
    23
    
    
    
    3.7
    
    
    
    12
    
    
    
    (2.1
    )
    
    
    (123
    )LCDP
    
    
    1.4
    
    
    
    2
    
    
    
    (20.7
    )
    
    
    (67
    )
    
    
    1.6
    
    
    
    94Corporate
    
    
    (2.4
    )
    
    
    (3
    )
    
    
    20.3
    
    
    
    66
    
    
    
    (4.5
    )
    
    
    (265
    )Total net income attributable to Nam Tai shareholders
    
    $
    69.5
    
    
    
    100
    %
    
    $
    30.6
    
    
    
    100
    %
    
    $
    1.7
    
    
    
    100
    %
  43




---



##### Table of Contents



®
    Year Ended December 31, 2008 Compared to Year Ended December 31, 2007
 Net Sales.
  Year ended December 31,2007
    
    
    2008
    
    
    2008 vs. 2007Dollars
    
    
    
    
    
    
    Dollars(in thousands)
    
    
    Percent
    
    
    (in thousands)
    
    
    Percent
    
    
    PercentCECP
    
    $
    283,757
    
    
    
    36
    %
    
    $
    271,365
    
    
    
    44
    %
    
    
    (4.4
    )%TCA
    
    
    413,198
    
    
    
    53
    
    
    
    274,953
    
    
    
    44
    
    
    
    (33.5
    )%LCDP
    
    
    83,867
    
    
    
    11
    
    
    
    76,534
    
    
    
    12
    
    
    
    (8.7
    )%Total net sales
    
    $
    780,822
    
    
    
    100
    %
    
    $
    622,852
    
    
    
    100
    %
    
    
    (20.2
    )%
    Gross Profit.
 General and Administrative Expenses.
 Selling Expenses.
 Research and Development Expenses.
 44




---



##### Table of Contents



Impairment loss on goodwill.
 Other Income, Net.
 Gain on Sale of Subsidiaries Shares
 Interest Income.
 Interest
Expense
 Income Taxes
 Net Income Attributable to Noncontrolling Interests
 Net Income Attributable to Nam Tai Shareholders.
     Liquidity and Capital Resources
 Liquidity
    
   45




---



##### Table of Contents



Year Ended December 31,2007
    
    
    2008
    
    
    2009Net cash provided by operating activities
    
    $
    71,050
    
    
    $
    36,791
    
    
    
    $38,503Net cash provided by (used in) investing activities
    
    
    26,610
    
    
    
    (34,723
    )
    
    
    (74,781
    )Net cash used in financing activities
    
    
    (47,098
    )
    
    
    (42,267
    )
    
    
    (18,056
    )Net increase (decrease) in cash and cash equivalents
    
    
    50,562
    
    
    
    (40,199
    )
    
    
    (54,334
    )
         Capital Resources
   46




---



##### Table of Contents



Payments (in thousands) due by periodContractual Obligations
    
    Total
    
    
    2010
    
    
    2011-2013
    
    
    2013-2015
    
    
    After 2015Long-term debt obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital (finance) lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    3,999
    
    
    
    1,797
    
    
    
    2,202
    
    
    
    
    
    
    
    Purchase obligations:Capital commitment
    
    
    2,191
    
    
    
    2,191
    
    
    
    
    
    
    
    
    
    
    
    Other purchase obligations
    
    
    31,021
    
    
    
    31,021
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities reflected on the Companys balance
sheet under US GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    37,211
    
    
    $
    35,009
    
    
    $
    2,202
    
    
    $
    
    
    
    $
    
  Impact of Inflation
  Exchange Controls
  Recent Changes in Accounting Standards
 The Fair Value Option for Financial Assets
and Financial LiabilitiesIncluding an amendment of FASB Statement No. 115 Financial Instruments  overall 
disclosure  Fair value Option
 47




---



##### Table of Contents



Business Combination Accounting for Costs Associated with Exit or
Disposal Activities Accounting for
Contingencies Business Combination
 Noncontrolling Interests in Consolidated
Financial Statements  An Amendment of ARB No. 51 Consolidation  Overall  Other Presentation Matter 
Noncontrolling Interest In a Subsidiary
 Determination of the Useful Life of Intangible
Assets. Goodwill and Other Intangible Assets Intangibles  Goodwill and Other Goodwill
 Determining
Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities Compensation-Stock Compensation
 Accounting for Defensive Intangible Assets Business Combination
 Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from Contingencies  Business Combinations Business Combination
 Recognition and Presentation of
Other-Than-Temporary Impairments
 48




---



##### Table of Contents



Investments 
Debt and Equity Securities
 Interim Disclosures about Fair
Value of Financial Instruments Disclosures about Fair Value of Financial
Instruments  Interim Financial Reporting Financial Instrument-Overall-Disclosure
 Subsequent Events Subsequent Events Subsequent Events (Topic 855): Amendments to Certain
Recognition and Disclosure Requirements
 Accounting for Transfers of Financial Assetsan
amendment of FASB Statement No. 140 Transfers and
Servicing  Overall
 Amendments to FASB Interpretation No. 46 Consolidation of Variable Interest Entities Consolidation 
Overall  Disclosure  Variable Interest Entities
 The FASB Accounting
Standards
Codification
and the Hierarchy of Generally Accepted Accounting Principles  a
replacement of FASB Statement No 162
 Fair Value
Measurements and Disclosures (Topic 820)
 Income Taxes (Topic 740)Implementation
Guidance on Accounting for Uncertainty in Income Taxes and Disclosure Amendments for Nonpublic
Entities
 Fair Value Measurements and Disclosures
(Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its
Equivalent)
 49




---



##### Table of Contents



Consolidations (Topic 810): Improvements
to Financial Reporting by Enterprises Involved with Variable Interest Entities Amendments to FASB Interpretation No. 46
(R) Consolidation  Overall  Disclosure -
Variable Interest Entities
 Consolidation (Topic 810)
 Research and Development
  Trend Information
        50




---



##### Table of Contents



Off-balance Sheet Arrangements
  
 ITEM 6. DIRECTORS AND SENIOR MANAGEMENT
 Directors and Senior Managers
  Name
    
    Age
    
    
    Position with Nam Tai or its SubsidiariesM. K. Koo
    
    
    65
    
    
    Chairman of the Board of Nam Tai and NTEEP and Chief Financial Officer of Nam TaiColin Yeoh
    
    
    45
    
    
    Chief Executive Officer of Nam Tai and a director of NTEEPIvan Chui
    
    
    51
    
    
    Business Development President of Zastron ShenzhenPeter R. Kellogg
    
    
    67
    
    
    Member of the Board of DirectorsDr. Wing Yan (William) Lo
    
    
    49
    
    
    Member of the Board of DirectorsCharles Chu
    
    
    53
    
    
    Member of the Board of DirectorsMark Waslen
    
    
    49
    
    
    Member of the Board of Directors
 M. K. Koo.
 Colin Yeoh.
 Ivan Chui
 Peter R. Kellogg.
 51




---



##### Table of Contents



Dr. Wing Yan (William) Lo
 Charles Chu.
 Mark Waslen
  Compensation of Directors and Senior Management
 Compensation on an Aggregate Basis
 Share-based Payment Compensation  Stock Compensation,
     52




---



##### Table of Contents



Compensation on an Individual Basis *
 Directors Compensation
  Fees Earned or
    
    
    Option
    
    
    All Other
    
    
    TotalName
    
    Paid in Cash ($)(1)
    
    
    Awards ($)(2)
    
    
    Compensation ($)
    
    
    ($)Peter R. Kellogg
    
    
    39,000
    
    
    
    13,350
    
    
    
    
    
    
    
    52,350Charles Chu
    
    
    42,500
    
    
    
    13,350
    
    
    
    
    
    
    
    55,850Dr. Wing Yan (William) Lo
    
    
    42,000
    
    
    
    13,350
    
    
    
    
    
    
    
    55,350Mark Waslen
    
    
    41,000
    
    
    
    13,350
    
    
    
    
    
    
    
    54,350
 
 (1)
    
    Consists of the aggregate dollar amount of all fees earned or paid in cash for services
as a director, including annual retainer fees and meeting fees. Cash paid to directors were in
HK$ and for purposes of the presentation in the above table have been converted into US$ at a
conversion rate $1.00:HK$7.75.(2)
    
    Consists of the US$ amount of option grants that Nam Tai recognized for financial statement
reporting purposes in accordance with FASB ASC 718.  Options Granted During and Held by Directors, at December 31, 2009
  
 *
    
    Under the rules of the SEC, foreign private issuers like
us are not required to disclose compensation paid to our directors or
senior managers on an individual basis unless individual disclosure is
required in the foreign private issuers home country and is not otherwise
publicly disclosed by the company. Although we are not required by our
home country (the British Virgin Islands, the jurisdiction in which we are
organized), we are voluntarily providing disclosure of compensation we
paid to our directors and senior managers on an individual basis in this
Report and plan to do so in our proxy statement for our 2010 Annual
Meeting of Shareholders (even though we are not subject to the sections of
the Securities Exchange Act of 1934 regulating the solicitation of
proxies, consents or authorizations in respect of a security registered
under the Securities Exchange Act of 1934 or disclosures required in a
proxy statement in accordance with rules therefor promulgated under the
Securities Exchange Act of 1934). See Item 3. Key Information of this
Report under the heading Risk Factors  Our status as a foreign private
issuer in the United States exempts us from certain of the reporting
requirements under the Securities Exchange Act of 1934 and corporate
governance standards of the New York Stock Exchange, or NYSE, limiting the
protections and information afforded to investors. By providing
disclosures of compensation we pay to our directors and senior managers on
an individual basis in this Report or in our proxy statement, we are not
undertaking any duty, and investors and others reviewing this Report
should not expect, that we will continue to make such disclosures in any
future Reports or in our proxy statements as long as we are exempt from
doing so under the Securities Exchange Act of 1934. We reserve the right
to discontinue doing so at any time without prior notice.Further,
although the disclosures of compensation we paid to our directors and
senior managers on an individual basis that we have provided in this
Report may, in certain respects, appear comparable to similar disclosures
made by companies organized in the U.S. that are required to file Annual
Reports on Form 10-K or proxy statements under Regulation 14A under the
Securities Exchange Act of 1934, such disclosures that we have made in
this Report do not necessarily comply with the applicable requirements
therefor under Form 10-K or Regulation 14A and this Report does not
contain all disclosures required Item 11 of Form 10-K or Item 8 of
Schedule 14A of Regulation 14A. 53




---



##### Table of Contents



Compensation on an Individual Basis 1  Executive Officers
  Summary Compensation TableOption
    
    All otherBonus
    
    Awards
    
    Compensation-Name and Principal Position
    
    Year
    
    Salary ($)(1)
    
    ($)(2)

    



    ($)(3)
    
    ($)(4)
    
    Total ($)Koo Ming Kown(5)
    
    
    2009
    
    
    
    179,409
    (6)
    
    
    
    
    
    
    13,350
    (7)
    
    
    853,654
    (8)
    
    
    1,046,413Chief Financial Officer and
    
    
    2008
    
    
    
    42,000
    (8)
    
    
    
    
    
    
    27,900
    (7)
    
    
    26,931
    (8)
    
    
    96,831Chairman of the Board of
    
    
    2007
    
    
    
    45,000
    
    
    
    
    
    
    
    35,550
    (7)
    
    
    30,280
    
    
    
    110,830Nam TaiColin Yeoh(9)
    
    
    2009
    
    
    
    171,304
    
    
    
    
    
    
    
    
    
    
    
    4,191
    
    
    
    175,495Chief Executive Officer of
    
    
    2008
    
    
    
    201,184
    
    
    
    
    
    
    
    
    
    
    
    1,587
    
    
    
    202,771Nam Tai
    
    
    2007
    
    
    
    219,198
    
    
    
    
    
    
    
    
    
    
    
    3,288
    
    
    
    222,486Ivan Chui(10)
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129,032
    
    
    
    129,032Business Development
President
    
    
    2008
    
    
    
    176,282
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    176,282of Zastron Shenzhen
    
    
    2007
    
    
    
    192,308
    
    
    
    
    
    
    
    
    
    
    
    11,792
    
    
    
    204,100Patinda Lei(11)
    
    
    2009
    
    
    
    181,993
    
    
    
    
    
    
    
    
    
    
    
    3,457
    
    
    
    185,450Vice CEO of Zastron
    
    
    2008
    
    
    
    358,974
    
    
    
    
    
    
    
    
    
    
    
    9,637
    
    
    
    368,611Business Unit
    
    
    2007
    
    
    
    358,974
    
    
    
    155,250
    
    
    
    
    
    
    
    9,637
    
    
    
    523,861Karene Wong(12)
    
    
    2009
    
    
    
    262,523
    
    
    
    
    
    
    
    
    
    
    
    4,937
    
    
    
    267,460President and Chief Executive
    
    
    2008
    
    
    
    358,974
    
    
    
    455,241
    
    
    
    
    
    
    
    10,217
    
    
    
    824,432Officer (Acting) of Nam Tai
    
    
    2007
    
    
    
    358,974
    
    
    
    1,259,305
    
    
    
    
    
    
    
    10,217
    
    
    
    1,628,496and NTEEP GroupAnthony Chan(13)
    
    
    2009
    
    
    
    138,710
    
    
    
    
    
    
    
    
    
    
    
    2,387
    
    
    
    141,097Chief Financial Officer (Acting)
of
    
    
    2008
    
    
    
    192,308
    
    
    
    24,038
    
    
    
    
    
    
    
    4,559
    
    
    
    220,905Nam Tai and NTEEP Group
    
    
    2007
    
    
    
    181,538
    
    
    
    60,513
    
    
    
    
    
    
    
    4,024
    
    
    
    246,075
 
 (1)
    
    Consists of the dollar value of base salary, including housing, if applicable, earned by
the named executive officer during the year indicated. All cash compensation included in the
table was paid to Nam Tais senior managers are in HK$ and for purposes of the presentation in
the above table have been converted into US$ at a conversion rate $1.00:HK$7.75 for 2009 and
$1.00:HK$7.80 for 2007 and 2008.(2)
    
    Consists of the dollar value of bonus earned by the named executive officer during the year
covered.(3)
    
    Represents the total fair value of options awards recognized for financial statement
reporting purposes with respect to the year indicated in accordance
with FASB ASC 718.(4)
    
    To the extent applicable to the named individual, consists of amounts paid for golf club
membership fees, mandatory provident fund, life, medical, travel, social security,
unemployment compensation, welfare and accident insurance premiums and fees for annual
physical. 54




---



##### Table of Contents



(5)
    
    Appointed as CFO of Nam Tai effective March 1, 2009. Prior to then, Mr. Koo served as
Non-executive Chairman of the Board and since then has served as Executive Chairman of the
Board.(6)
    
    Includes cash compensation as a director and Mr. Koos housing allowance.(7)
    
    Options to purchase 15,000 shares were granted to Mr. Koo in 2009 in his capacity as Chief
Financial Officer. In 2007 and 2008, Mr. Koos options were granted to him as a
non-employee director.(8)
    
    For 2009, in addition to insurance and golf membership
expenses, includes $833,000 the Company has accrued in payment for
Mr. Koos loss of office compensation. See Item 7. Major
Shareholders and Related Party Transactions  Certain Relationships
and Related Party Transactions for a discussion of the
compensation payable to Mr. Koo under certain circumstances for his
loss of office. For 2008, also includes $13,650 paid to Mr. Koo when his outstanding options were repurchased along
with all other director options in 2008.(9)
    
    Appointed as CEO of Nam Tai effective December 1, 2009. Compensation for 2007 through
November 30, 2009 was paid to Dr. Yeoh in other executive capacities.(10)
    
    Appointed as Business Development President of Zastron Shenzhen in December 2009.
Compensation for 2007 through November 2009 was paid to
Mr. Chui in other executive capacities.(11)
    
    Appointed as Vice CEO of Zastron Business Unit effective November 1, 2008.(12)
    
    Resigned as President and Chief Executive Officer (Acting) of Nam Tai and NTEEP Group on
December 2, 2009.(13)
    
    Resigned as Chief Financial Officer (Acting) of Nam Tai on March 1, 2009 and was appointed at
that time as Vice Chief Financial Officer of Nam Tai. Resigned from Nam Tai on November 30,
2009. Retirement Benefits
  Number
    
    Value at
    
    Companyof years
    
    December 31, 2009 of
    
    Paymentsof credited
    
    Accumulated
    
    duringName
    
    Service
    
    Benefits ($)
    
    2009 ($)Koo Ming Kown
    
    
    35.0
    (1)
    
    N/A
    
    N/AColin Yeoh
    
    
    6.3
    
    
    
    2,317
    
    
    
    1,548Ivan Chui
    
    
    9.2
    
    
    
    12,308
    
    
    
    N/APatinda Lei
    
    
    9.0
    
    
    
    12,308
    
    
    
    N/AKarene Wong
    
    
    9.0
    
    
    
    12,695
    
    
    
    387Anthony Chan
    
    
    8.9
    
    
    
    13,727
    
    
    
    1,419
 
 (1)
    
    Mr. Koos services as our employee were for Nam Tai
Electronics, Inc., the ultimate parent, and as such he is not
eligible under Hong Kongs Mandatory Provident Retirement Fund
or Macaos retirement benefit scheme. Accordingly, no
contributions have been made for Mr. Koo. Options Held by Executive Officers at December 31, 2009
  Board Practices
  Corporate Governance Guidelines
  55




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##### Table of Contents



shareholder@namtai.com
 NYSE Listed Company Manual Disclosure
  Committee Charters and Independence
     
    
    who has no material relationship with the Company as affirmatively determined by the
Board;
    
    who is not nor has been within the last 3 years immediately prior to the date of his
appointment as the INED an employee of the Company, provided, however, employment as an
interim Chairman of the Board or Chief Executive Officer or other executive officer of
the Company shall not disqualify a director from being considered independent following
that employment;
    
    whose immediate family members1 are not, nor have been within the last 3
years immediately prior to the date of his appointment as the INED, an executive officer
of the Company;
    
    who, or whose immediate family member1, have not received greater than
US$120,000 in direct compensation from the Company, other than directors and
committees fees and pension or other forms of deferred compensation for prior service
(provided such compensation is not contingent in any way on continuous service), during
any twelve-month period within the last 3 years immediately prior to the date of his
appointment as the INED;
    
    who is neither a partner nor an employee of the internal or external audit firm of
the Company and within the last 3 years immediately prior to the date of his appointment
as the INED was neither a partner nor an employee of such firm and personally worked on
the Companys audit during that time;
    
    none of whose immediate family members1 is (a) a current partner of the
internal or external audit firm of the Company or (b) a current employee of the internal
or external audit firm of the Company and personally works on the Companys audit;
    
    none of whose immediate family members1 have been, within the last 3 years
immediately prior to the date of his appointment as the INED, partners or employees of
the internal or external audit firm and personally worked on the Companys audit during
that time; and
    
    who, or whose immediate family members1, are not, nor within the last 3
years immediately prior to the date of his appointment as the INED, employed as an
executive officer of another company in which any of the Companys present executives at
the same time serves or served on that companys compensation committee; and
 56




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##### Table of Contents




    
    who is not an employee of, or whose immediate family members1 are not
executive officers of, a company that has made payments to, or received payments from,
the Company for property or services in an amount which in any of the 3 fiscal years
prior to his appointment as the INED, exceeds the greater $1 million or 2% of such other
companys consolidated gross revenues.
 
  Audit Committee
   Compensation Committee
   Nominating / Corporate Governance Committee
   Stock Options of Directors and Senior Management
   Share Ownership of Directors and Senior Management
  Employee Stock Option Plans
   57




---



##### Table of Contents



Employees
  At December 31,Geographic Location
    
    Main Activity
    
    2007
    
    
    2008
    
    
    2009Shenzhen, PRC
    
    Manufacturing
    
    
    6,220
    
    
    
    5,225
    
    
    
    3,734Research and development
    
    
    360
    
    
    
    310
    
    
    
    156Quality control
    
    
    558
    
    
    
    484
    
    
    
    274Engineering
    
    
    337
    
    
    
    277
    
    
    
    168Administration
    
    
    445
    
    
    
    403
    
    
    
    302Marketing
    
    
    101
    
    
    
    105
    
    
    
    64Support(1)
    
    
    298
    
    
    
    238
    
    
    
    160Total Shenzhen
    
    
    8,319
    
    
    
    7,042
    
    
    
    4,858Wuxi, PRC
    
    Manufacturing
    
    
    
    
    
    
    5
    
    
    
    153Research and development
    
    
    
    
    
    
    3
    
    
    
    15Quality control
    
    
    
    
    
    
    5
    
    
    
    41Engineering
    
    
    
    
    
    
    7
    
    
    
    35Administration
    
    
    
    
    
    
    15
    
    
    
    76Marketing
    
    
    
    
    
    
    4
    
    
    
    7Support(1)
    
    
    
    
    
    
    7
    
    
    
    13Total Wuxi
    
    
    
    
    
    
    46
    
    
    
    340Hong Kong
    
    Administration
    
    
    13
    
    
    
    8
    
    
    
    5Total Hong Kong
    
    
    13
    
    
    
    8
    
    
    
    5Macao
    
    Administration
    
    
    13
    
    
    
    5
    
    
    
    Total Macao
    
    
    13
    
    
    
    5
    
    
    
    Administration
    
    
    1
    
    
    
    2
    
    
    
    Japan
    
    Marketing
    
    
    2
    
    
    
    1
    
    
    
    Research & Development
    
    
    1
    
    
    
    
    
    
    
    Total Japan
    
    
    4
    
    
    
    3
    
    
    
    Total employees
    
    
    8,349
    
    
    
    7,104
    
    
    
    5,203
 
 (1)
    
    Employees categorized in support include personnel engaged in procurement, customs,
shipping and warehouse services.  
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 Shares and Options Ownership of Directors, Senior Management and Principal Shareholders
  58




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##### Table of Contents



Shares beneficially owned(1)Name
    
    Number
    
    PercentPeter R. Kellogg
    
    
    5,811,180
    (2)
    
    
    13.0M. K. Koo
    
    
    5,257,786

(3)
    
    
    11.7I.A.T. Reinsurance Syndicate Ltd.
    
    
    5,224,800

(2)
    
    
    11.7Royce & Associates, LLC
    
    
    2,349,614

(4)
    
    
    5.2Ivan Chui
    
    
    295,870
    
    
    
    *Colin Yeoh
    
    
    10,000
    
    
    
    *Charles Chu
    
    
    17,500
    
    
    
    *Wing Yan (William) Lo
    
    
    15,000
    
    
    
    *Mark Waslen
    
    
    25,000
    
    
    
    *
 
 *
    
    Less than 1%.(1)
    
    Percentage of ownership is based on 44,803,735 common shares outstanding as of February 28,
2010. In accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934, shares not outstanding but which are the
subject of options exercisable within 60 days of February 28, 2009
have been considered outstanding for the purpose of computing the
percentage of Nam Tais outstanding shares owned by the listed
person holding such options, but are not considered outstanding for
the purpose of computing the percentage of shares owned by any of the
other listed persons.(2)
    
    Mr. Kellogg directly holds 571,380 common shares and indirectly, through I.A.T. Reinsurance
Syndicate Ltd., holds 5,224,800 common shares. I.A.T. Reinsurance Syndicate Ltd. is a Bermuda
corporation of which Mr. Kellogg is the sole holder of its voting stock. Mr. Kellogg disclaims
beneficial ownership of those shares. Mr. Kellogg also holds options
to purchase 15,000 shares, which he received in 2009 as a director of
Nam Tai.(3)
    
    Mr. Koo beneficially owned 5,242,786 common shares
jointly with Ms. Cho Sui Sin, Mr. Koos
wife. Mr. Koo also holds options to purchase 15,000 shares, which he
received in 2009 as Nam Tais Chief Financial Officer.(4)
    
    Based on Amendment No. 1 to Schedule 13G filed with the SEC by the beneficial holder on
January 26, 2010.    Percentage Ownership (1) atFebruary 29,
    
    February 28,2008
    
    2009
    
    2010Peter R.
Kellogg (2)
    
    
    12.9
    
    
    
    12.9
    
    
    
    13.0M. K. Koo
    
    
    12.7
    
    
    
    11.7
    
    
    
    11.7I.A.T. Reinsurance Syndicate Ltd.
    
    
    11.7
    
    
    
    11.7
    
    
    
    11.7Royce & Associates, LLC
    
    
    
    
    
    
    5.1

(3)
    
    
    5.2

(4)Renaissance Technologies LLC and James H. Simons
    
    
    
    
    
    
    5.5

(5)
    
    
    4.0

(6)Invesco Ltd. and PowerShares Capital Management LLC
    
    
    7.1

(7)
    
    
    0.3

(8)
    
    
    
    (9)
 59




---



##### Table of Contents



(1)
    
    Based on 44,803,735 common shares outstanding on
February 29, 2008, February 28, 2009 and February 28, 2010. In accordance with Rule 13d-3(d)(1) under the Securities
Exchange Act of 1934, shares not outstanding but which are the
subject of options exercisable within 60 days of February 28, 2009
have been considered outstanding for the purpose of computing the
percentage of Nam Tais outstanding shares owned by the listed
person holding such options, but are not considered outstanding for
the purpose of computing the percentage of shares owned by any of the
other listed persons.(2)
    
    Includes shares registered in the name of I.A.T. Reinsurance Syndicate Ltd., of which Mr.
Kellogg disclaims beneficial ownership. Mr. Kellogg also holds options
to purchase 15,000 shares, which he received in 2009 as a director of
Nam Tai.(3)
    
    Based on Schedule 13G filed with the SEC by the beneficial holder on January 27, 2009.(4)
    
    Based on Amendment No. 1 to Schedule 13G filed with the SEC by the beneficial holder on January 26, 2010.(5)
    
    Based on a Schedule 13G filed with the SEC by the beneficial holders on February 13, 2009.(6)
    
    Based on Amendment No. 1 to Schedule 13G filed with the SEC by the beneficial holders on February 12, 2010.(7)
    
    Based on Schedule 13G filed with the SEC by the beneficial holders on February 13, 2008.(8)
    
    Based on Amendment No. 1 to Schedule 13G filed with the SEC by Invesco PowerShares Capital
Management LLC on February 13, 2009.(9)
    
    The holder did not make a filing with the SEC under Rule 13d-1 or 13d-2 of the Securities
Exchange Act of 1934 after the filing referred to in footnote (8) to this table and Nam Tai
has no information regarding the holders beneficial ownership of its shares since the filing
referred to in footnote 8.  Certain Relationships and Related Party Transactions
  60




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##### Table of Contents



ITEM 8. FINANCIAL INFORMATION
 Financial Statements
  Legal Proceedings
  Tax Dispute with Hong Kong Inland Revenue Department
        61




---



##### Table of Contents



Export Sales
  Year Ended December 31,Geographic Areas
    
    2007
    
    2008
    
    2009Hong Kong
    
    
    33
    %
    
    
    36
    %
    
    
    28
    %Europe
    
    
    16
    
    
    
    22
    
    
    
    12United States
    
    
    15
    
    
    
    17
    
    
    
    10China (excluding Hong Kong)
    
    
    22
    
    
    
    14
    
    
    
    11North America (excluding United States)
    
    
    1
    
    
    
    3
    
    
    
    Japan
    
    
    3
    
    
    
    2
    
    
    
    35Korea
    
    
    4
    
    
    
    2
    
    
    
    Other
    
    
    6
    
    
    
    4
    
    
    
    4100
    %
    
    
    100
    %
    
    
    100
    %
 Dividends
  Year ended December 31,2005
    
    2006
    
    2007
    
    2008
    
    2009Total dividends declared (in thousands)
    
    $
    56,324
    
    
    $
    66,497
    
    
    $
    37,635
    
    
    $
    39,427
    
    
    $
    Regular dividends per share
    
    $
    1.32
    
    
    $
    1.44
    
    
    $
    0.84
    
    
    $
    0.88
    
    
    $
    Special dividends
    
    $
    
    
    
    $
    0.08
    
    
    $
    
    
    
    $
    
    
    
    $
    Total dividends per share
    
    $
    1.32
    
    
    $
    1.52
    
    
    $
    0.84
    
    
    $
    0.88
    
    
    $
    
   62




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##### Table of Contents



ITEM 9. THE LISTING
   2007
    
    2008
    
    2009Average
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    AverageDaily
    
    
    
    
    
    
    
    
    
    Daily
    
    
    
    
    
    
    
    
    
    DailyTrading
    
    
    
    
    
    
    
    
    
    Trading
    
    
    
    
    
    
    
    
    
    TradingHigh
    
    Low
    
    Volume(1)
    
    High
    
    Low
    
    Volume(1)
    
    High
    
    Low
    
    Volume(1)1st Quarter
    
    $
    15.28
    
    
    $
    12.70
    
    
    
    222,472
    
    
    $
    11.92
    
    
    $
    8.37
    
    
    
    326,052
    
    
    $
    6.16
    
    
    $
    2.83
    
    
    
    271,9892nd Quarter
    
    
    14.38
    
    
    
    11.92
    
    
    
    244,741
    
    
    
    13.31
    
    
    
    9.62
    
    
    
    197,453
    
    
    
    4.71
    
    
    
    3.80
    
    
    
    189,1923rd Quarter
    
    
    13.58
    
    
    
    11.76
    
    
    
    248,325
    
    
    
    12.99
    
    
    
    8.02
    
    
    
    198,363
    
    
    
    6.03
    
    
    
    4.05
    
    
    
    141,3554th Quarter
    
    
    13.69
    
    
    
    11.02
    
    
    
    236,070
    
    
    
    8.16
    
    
    
    4.79
    
    
    
    248,775
    
    
    
    5.96
    
    
    
    5.10
    
    
    
    99,584
 
 (1)
    
    Determined by dividing the sum of the reported daily volume for the quarter by the number
of trading days in the quarter.  Average DailyYear ended
    
    High
    
    Low
    
    Trading Volume(1)December 31, 2009
    
    $
    6.16
    
    
    $
    2.83
    
    
    
    174,327December 31, 2008
    
    
    13.31
    
    
    
    4.79
    
    
    
    241,672December 31, 2007
    
    
    15.28
    
    
    
    11.02
    
    
    
    238,018December 31, 2006
    
    
    24.27
    
    
    
    11.43
    
    
    
    305,468December 31, 2005
    
    
    28.36
    
    
    
    17.25
    
    
    
    283,482
 
 (1)
    
    Determined by dividing the sum of the reported daily volume for the year by the number of
trading days in the year.  Average DailyMonth ended
    
    High
    
    Low
    
    Trading Volume(1)February 28, 2010
    
    $
    4.88
    
    
    $
    4.33
    
    
    
    145,184January 31, 2010
    
    
    5.30
    
    
    
    4.79
    
    
    
    136,216December 31, 2009
    
    
    5.49
    
    
    
    5.22
    
    
    
    92,573November 30, 2009
    
    
    5.67
    
    
    
    5.29
    
    
    
    95,645October 31, 2009
    
    
    5.96
    
    
    
    5.10
    
    
    
    110,177September 30, 2009
    
    
    6.03
    
    
    
    5.14
    
    
    
    100,062
 
 (1)
    
    Determined by dividing the sum of the reported daily volume for the month by the number of
trading days in the month. 
 ITEM 10. ADDITIONAL INFORMATION
 Share Capital
  Memorandum and Articles of Association
  63




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##### Table of Contents




    
    are entitled to one vote for each whole share on all matters to be voted upon by
shareholders, including the election of directors;
    
    do not have cumulative voting rights in the election of directors;
    
    are entitled to receive dividends if and when declared by our board of directors out
of funds legally available under British Virgin Islands law; and
    
    do not have preemptive rights to purchase any additional, unissued common shares.
  
    
    all of common shares are equal to each other with respect to
voting and dividend
rights; and
    
    in the event of our liquidation, all assets available for distribution to the holders
of our common shares are distributable among them according to their respective
holdings; or
  
    
    to restrict the rights or powers of our shareholders to amend the Memorandum or the
Articles;
    
    to change the percentage of shareholders required to pass a resolution of
shareholders to amend our Charter; or
    
    in circumstances where our Charter cannot be amended by the Shareholders; or
    
    to authorize the Company to issue, or authorize the issuance
of, bearer shares of capital stock.
      
    
    Regulation 53 provides that a director may be counted as one of a quorum in respect
of any contract or arrangement in which the director is materially interested or makes
with the Company.
    
    Regulation 46 allows the directors to vote compensation to themselves in respect of
services rendered to us.
 64




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##### Table of Contents




    
    Regulation 62 provides that the directors may by resolution exercise all the powers
on our behalf to borrow money and to mortgage or charge our undertakings and property or
any part thereof, to issue debentures, debenture stock and other securities whenever we
borrow money or as security for any of our debts, liabilities or obligations or those of
any third party. These borrowing powers can be altered by an amendment to the Articles.
    
    Regulation 78 of the Articles allows us to deduct from any shareholders dividends
amounts owing to us by that shareholder.
    
    Regulation 8(b) provides that we can redeem shares at fair market value from any
shareholder against whom we have a judgment debt.
    
    Regulation 5(a) of the Articles provides that the Companys registered shares may be
certificated or uncertificated and shall be entered in the register of members of the
Company and registered as they are issued.
    
    Regulation 7 provides that without prejudice to any special rights previously
conferred on the holders of any existing shares, any of our shares may be issued with
such preferred, deferred or other special rights or such restrictions, whether in regard
to dividends, voting, return of capital or otherwise as the directors may from time to
time determine.
    
    Regulation 9 provides that if at any time the capital stock is divided into different
classes or series of shares, the rights attached to any class or series may be varied
with the consent in writing of the holders of not less than three-fourths of the issued
shares of any other class or series of shares which may be affected by such variation.
    
    Regulations 22 to 26 of our Articles of Association and under applicable BVI law provide that directors may convene
meetings of our shareholders at such times and in such manner and places as the
directors consider necessary or desirable, and they shall convene such a meeting upon
the written request of shareholders holding more than 30% of the votes of our
outstanding voting shares. Other than providing, if requested, reasonable proof of a
holders status as a holder of our shares as of the applicable record date, there is no
condition to the admission of a shareholder or his or her proxy holder to our meetings
of shareholders.
     Transfer Agent
  Material Contracts
  i.e.
    65




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##### Table of Contents



i.e. i.e.
   i.e. i.e.
      Exchange Controls
  Taxation
 United States Federal Income Tax Consequences
  General
  66




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##### Table of Contents




    
    a dealer in securities or currencies;
    
    a trader in securities that elects to use a market-to-market method of accounting for
its securities holdings;
    
    a financial institution or a bank;
    
    an insurance company;
    
    a tax-exempt organization;
    
    a person that holds our common shares in a hedging transaction or as part of a
straddle or a conversion transaction;
    
    a person whose functional currency for United States federal income tax purposes is
not the U.S. dollar;
    
    a person liable for alternative minimum tax;
    
    a person that owns, or is treated as owning, 10% or more, by voting power or value,
of our common shares;
    
    certain former U.S. citizens and residents who have expatriated; or
    
    a person who receives our shares pursuant to the exercise of employee stock options
or otherwise as compensation.
 U.S. Holders
  
    
    an individual United States citizen or resident alien of the United States (as
specifically defined for United States federal income tax purposes);
    
    a corporation, or other entity treated as a corporation for United States federal
income tax purposes, created or organized in or under the laws of the United States, any
State or the District of Columbia;
    
    an estate whose income is subject to United States federal income tax regardless of
its source; or
    
    a trust (x) if a United States court can exercise primary supervision over the
trusts administration and one or more United States persons are authorized to control
all substantial decisions of the trust or (y) if it was in existence on August 20, 1996,
was treated as a United States person prior to that date and has a valid election in
effect under applicable Treasury regulations to be treated as a United States person.
 Distributions on Our Common Shares
  67




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##### Table of Contents



Sale, Exchange or Other Disposition of Our Common Shares
  
    
    you will recognize capital gain or loss equal to the difference (if any) between:
    
    the amount realized on such sale, exchange or other taxable disposition and
    
    your adjusted tax basis in such common shares (your adjusted tax basis in the shares
you hold generally will equal your U.S. dollar cost of such shares);
    
    such gain or loss will be long-term capital gain or loss if your holding period for
our common shares is more than one year at the time of such sale or other disposition;
    
    such gain or loss will generally be treated as United States source for United States
foreign tax credit purposes; and
    
    your ability to deduct capital losses is subject to limitations.
 PFIC Considerations
    68




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##### Table of Contents



Non-U.S. Holders
  Distributions on Our Common Shares
  
    
    you conduct a trade or business in the United States and
    
    the distributions are effectively connected with the conduct of that trade or
business (and, if an applicable income tax treaty so requires as a condition for you to
be subject to U.S. federal income tax on a net income basis in respect of income from
our common shares, such distributions are attributable to a permanent establishment that
you maintain in the United States).
    
    If you meet the two tests above, you generally will be subject to tax in respect of
such dividends in the same manner as a U.S. Holder, as described above. In addition, any
effectively connected dividends received by a non-U.S. corporation may also, under
certain circumstances, be subject to an additional branch profits tax at a 30 percent
rate or such lower rate as may be specified by an applicable income tax treaty.
 Sale, Exchange or Other Disposition of Our Common Shares
  
    
    your gain is effectively connected with a trade or business that you conduct in the
United States (and, if an applicable income tax treaty so requires as a condition for
you to be subject to U.S. federal income tax on a net income basis in respect of gain
from the sale or other disposition of our common shares, such gain is attributable to a
permanent establishment maintained by you in the United States), or
    
    you are an individual Non-U.S. Holder and are present in the United States for at
least 183 days in the taxable year of the sale or other disposition, and certain other
conditions exist.
  Backup Withholding and Information Reporting
  
    
    you are a corporation or other exempt recipient, or
    
    you provide your correct United States federal taxpayer identification number and
certify, under penalties of perjury, that you are not subject to backup withholding.
  69




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##### Table of Contents



Documents on Display
  70




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##### Table of Contents



ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Currency Fluctuations and Foreign Exchange Risk
   Hong Kong Dollar
  Japanese Yen
  
  Chinese Renminbi
   71




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##### Table of Contents



Currency Hedging
   Currencies
included in Cash and Cash Equivalents and Fixed Deposits Maturing
Over Three Months
  Year ended December 31Currencies included in cash and cash equivalents and fixed deposits maturing over three months ($ in thousands)
    
    2008
    
    
    2009United States dollars
    
    $
    178,105
    
    
    $
    71,891Chinese renminbi
    
    
    34,493
    
    
    
    55,691Japanese yen
    
    
    435
    
    
    
    2,557Hong Kong
dollars
    
    
    23,971
    
    
    
    65,486Macao Patacas
    
    
    13
    
    
    
    Total US$ equivalent
    
    $
    237,017
    
    
    $
    195,625
 Interest Rate Risk
 Interest rate risk
    72




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##### Table of Contents



ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
 A. Debt Securities
B. Warrants and Rights
C. Other Securities
D. American Depositary Shares
    
    
    
    
    

(IMAGE)
    
    Disclosures under Items 12A to 12D(2) of
Form 20-F are not required when Form 20-F is
used as an annual report and, in any event,
are not applicable to Nam Tai.(1
    )(2
    )(3
(4
    )
)
    

(IMAGE)
    
    Disclosures under Items 12D(3) and 12D(4) of
Form 20-F are required even when Form 20-F
is used as an annual report. However,
registrant has no Amercian Depositary
Recepts deposited or outstanding.
 
 PART II
 
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
  
 ITEM 15. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Report of Management on Internal Control Over Financial Reporting
   
 Attestation Report of Independent Registered Public Accounting Firm
  73




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal
Control  Integrated Framework
    Internal
Control  Integrated Framework
   
 74




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##### Table of Contents



Changes in internal control over financial reporting
  
 ITEM 16. [RESERVED]
 
 ITEM 16 A. AUDIT COMMITTEE FINANCIAL EXPERT
   
 ITEM 16 B. CODE OF ETHICS
  shareholder@namtai.com
 
 ITEM 16 C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   Year ended December 312008
    
    
    2009Audit Fees (1)
    
    $
    1,211
    
    
    
    329Audit-related Fees (2)
    
    
    18
    
    
    
    8Tax Fees (3)
    
    
    7
    
    
    
    4Total
    
    $
    1,236
    
    
    $
    341
 
 (1)
    
    Audit Fees consist of fees billed for the annual audit of our consolidated financial
statements and the statutory financial statements of our subsidiaries. They also include fees
billed for other audit services, which are those services that only the independent registered
public accounting firm reasonably can provide, and include the provision of attestation
services relating to the review of documents filed with the SEC. 75




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##### Table of Contents



(2)
    
    Audit-related Fees consist of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of our consolidated financial
statements.(3)
    
    Tax Fees include fees billed for tax compliance services, including the preparation of
original and amended tax returns and claims for refund; tax consultations, such as assistance
and representation in connection with tax audits and appeals, tax advice related to mergers
and acquisitions, transfer pricing, and requests for rulings or technical advice from tax
authorities; tax planning services; and expatriate tax compliance, consultation and planning
services. Audit Committee Pre-approval Policies and Procedures
     
 ITEM 16 D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  
 ITEM 16 E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
  
 ITEM 16F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT.
  
 ITEM 16G. CORPORATE GOVERNANCE.
  76




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##### Table of Contents



PART III
 
 ITEM 17. FINANCIAL STATEMENTS
  
 ITEM 18. FINANCIAL STATEMENTS
 
 Index to Consolidated Financial Statements
 Report of Independent Registered Public Accounting Firm-Moore Stephens
    
    F-1Report of Independent Registered Public Accounting Firm-Deloitte Touche Tohmatsu
    
    F-2Consolidated Statements of Income for the years ended December 31, 2007, 2008 and 2009
    
    F-3Consolidated Balance Sheets as of December 31, 2008 and 2009
    
    F-4Consolidated Statements of Changes in Equity and Comprehensive Income for the years ended December 31,
2007, 2008 and 2009
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2008 and 2009
    
    F-6Notes to Consolidated Financial Statements
    
    F-8Schedule 1 Nam Tai Electronics, Inc. Statements of Income
    
    F-34Schedule 1 Nam Tai Electronics, Inc. Balance Sheets
    
    F-35Schedule 1 Nam Tai Electronics, Inc. Statement of Changes in Shareholders Equity and Comprehensive Income
    
    F-36Schedule 1 Nam Tai Electronics, Inc. Statements of Cash Flows
    
    F-37Schedule 1 Nam Tai Electronics, Inc. Note to Schedule 1
    
    F-38
  77




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     Internal Control  Integrated Framework
  
 F-1




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       
 F-2




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##### Table of Contents



NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of US dollars, except per share data)
 Year ended December 31,2007
    
    
    2008
    
    
    2009Net sales  third parties
    
    $
    780,822
    
    
    $
    622,852
    
    
    $
    408,137Cost of sales
    
    
    (693,804
    )
    
    
    (552,174
    )
    
    
    (367,817
    )Gross profit
    
    
    87,018
    
    
    
    70,678
    
    
    
    40,320General and administrative expenses(1)(2)
    
    
    (29,986
    )
    
    
    (29,112
    )
    
    
    (28,393
    )Selling expenses(1)
    
    
    (6,564
    )
    
    
    (6,945
    )
    
    
    (5,266
    )Research and development expenses
    
    
    (9,798
    )
    
    
    (10,890
    )
    
    
    (6,273
    )Impairment loss on goodwill
    
    
    
    
    
    
    (17,345
    )
    
    
    Total operating expenses
    
    
    (46,348
    )
    
    
    (64,292
    )
    
    
    (39,932
    )Income from operations
    
    
    40,670
    
    
    
    6,386
    
    
    
    388Other income (expenses), net
    
    
    2,219
    
    
    
    6,428
    
    
    
    (256
    )Gain on sales of subsidiaries shares
    
    
    390
    
    
    
    20,206
    
    
    
    Gain on disposal of marketable securities
    
    
    43,815
    
    
    
    
    
    
    
    Interest income
    
    
    9,163
    
    
    
    6,282
    
    
    
    818Interest expense
    
    
    (452
    )
    
    
    (356
    )
    
    
    (202
    )Income before income taxes
    
    
    95,805
    
    
    
    38,946
    
    
    
    748Income taxes
    
    
    (4,030
    )
    
    
    (2,877
    )
    
    
    (1,283
    )Consolidated net income (loss)
    
    
    91,775
    
    
    
    36,069
    
    
    
    (535
    )Net (income) loss attributable to noncontrolling interests
    
    
    (22,272
    )
    
    
    (5,434
    )
    
    
    2,187Net income
attributable to Nam Tai(3) shareholders
    
    $
    69,503
    
    
    $
    30,635
    
    
    $
    1,652Basic earnings per share
    
    $
    1.56
    
    
    $
    0.68
    
    
    $
    0.04Diluted earnings per share
    
    $
    1.55
    
    
    $
    0.68
    
    
    $
    0.04
 
 (1)
    
    The 2009 presentation shows general and administrative expenses and selling expenses as
separate line items, whereas the Companys consolidated statements of income for 2007 and
2008, as originally published, combined general and administrative expenses and selling
expenses as a single line item labeled Selling, general and administrative expenses.
Selling, general and administrative expenses for 2007 and 2008 have been presented separately
to conform to the 2009 presentation.(2)
    
    General and administrative expenses for the year ended December 31, 2009 include employee
severance benefits of $5,058.(3)
    
    Nam Tai refers to Nam Tai Electronics, Inc.  F-3




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##### Table of Contents



NAM TAI ELECTRONICS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands of US dollars, except share data)
 December 31,2008
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    237,017
    
    
    $
    182,722Fixed deposits maturing over three months
    
    
    
    
    
    
    12,903Accounts receivable, less allowance for doubtful accounts of $25
and $59 at December 31, 2008 and 2009, respectively
    
    
    104,150
    
    
    
    57,911Inventories
    
    
    27,300
    
    
    
    16,054Entrusted loan receivable
    
    
    8,199
    
    
    
    Prepaid expenses and other receivables
    
    
    4,148
    
    
    
    3,079Deferred tax assets  current
    
    
    1,232
    
    
    
    1,460Total current assets
    
    
    382,046
    
    
    
    274,129Property, plant and equipment, net
    
    
    108,067
    
    
    
    108,110Land use right
    
    
    13,593
    
    
    
    13,296Deposits for property, plant and equipment
    
    
    2,937
    
    
    
    32Goodwill
    
    
    2,951
    
    
    
    2,951Deferred tax assets  non-current
    
    
    3,547
    
    
    
    4,486Other assets
    
    
    920
    
    
    
    920Total assets
    
    $
    514,061
    
    
    $
    403,924LIABILITIES AND EQUITYCurrent liabilities:Notes payable
    
    $
    
    
    
    $
    691Entrusted loan payable
    
    
    8,199
    
    
    
    Accounts payable
    
    
    98,125
    
    
    
    58,667Accrued expenses and other payables
    
    
    25,967
    
    
    
    16,397Dividend payable
    
    
    9,857
    
    
    
    Income taxes payable
    
    
    861
    
    
    
    656Total current liabilities
    
    
    143,009
    
    
    
    76,411Deferred tax liability  non-current
    
    
    740
    
    
    
    1,103Total liabilities
    
    
    143,749
    
    
    
    77,514Equity:Common shares ($0.01 par value  authorized 200,000,000 shares,
issued 44,803,735 shares as at December 31, 2008 and 2009)
    
    
    448
    
    
    
    448Additional paid-in capital
    
    
    282,767
    
    
    
    285,264Retained earnings
    
    
    39,054
    
    
    
    40,706Accumulated other comprehensive loss
    
    
    (8
    )
    
    
    (8
    )Total Nam Tai shareholders equity
    
    
    322,261
    
    
    
    326,410Noncontrolling interests(1)
    
    
    48,051
    
    
    
    Total equity
    
    
    370,312
    
    
    
    326,410Total liabilities and equity
    
    $
    514,061
    
    
    $
    403,924
  
 (1)
    
    Noncontrolling interests for 2008 has been reclassified as equity in
accordance with Financial Accounting Standard Board (FASB) Accounting
Standards Codification (ASC) 810-10-45-16Consolidated  Overall  Other
Presentation Matter  Noncontrolling Interest in a Subsidiary.  F-4




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##### Table of Contents



NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND COMPREHENSIVE INCOME
(In thousands of US dollars, except share and per share data)
 AccumulatedCommon
    
    
    Common
    
    
    Reinstatement
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    Nam Tai
    
    
    
    
    
    
    
    
    
    
    ConsolidatedShares
    
    
    Shares
    
    
    of Redeemed
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Shareholders
    
    
    Noncontrolling
    
    
    Total
    
    
    ComprehensiveOutstanding
    
    
    Amount
    
    
    Shares
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Equity
    
    
    Interests
    
    
    Equity
    
    
    Income (Loss)Balance at January 1, 2007
    
    
    43,786,586
    
    
    $
    438
    
    
    $
    17,159
    
    
    $
    264,393
    
    
    $
    25,030
    
    
    $
    10,074
    
    
    $
    317,094
    
    
    $
    48,428
    
    
    $
    365,522Reinstatement of redeemed shares(Note
9(d))
    
    
    1,017,149
    
    
    
    10
    
    
    
    (17,159
    )
    
    
    17,149
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity-settled share-based payment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    353
    
    
    
    
    
    
    
    
    
    
    
    353
    
    
    
    36
    
    
    
    389Sales of subsidiaries shares to
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,351
    
    
    
    6,351Reserve shared by noncontrolling
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,052
    )
    
    
    
    
    
    
    (9,052
    )
    
    
    9,052
    
    
    
    Dividend for noncontrolling interests
of subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,031
    )
    
    
    (3,031
    )Purchases of
subsidiaries shares from
noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,347
    )
    
    
    (11,347
    )Consolidated net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,503
    
    
    
    
    
    
    
    69,503
    
    
    
    22,272
    
    
    
    91,775
    
    
    $
    91,775Unrealized gain of marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,451
    
    
    
    17,451
    
    
    
    5,608
    
    
    
    23,059
    
    
    $
    23,059Disposal of marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,381
    )
    
    
    (27,381
    )
    
    
    (9,941
    )
    
    
    (37,322
    )
    
    $
    (37,322
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (152
    )
    
    
    (152
    )
    
    
    
    
    
    
    (152
    )
    
    $
    (152
    )Consolidated comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    77,360Cash dividends ($0.84 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,635
    )
    
    
    
    
    
    
    (37,635
    )
    
    
    
    
    
    
    (37,635
    )Balance at December 31, 2007
    
    
    44,803,735
    
    
    $
    448
    
    
    $
    
    
    
    $
    281,895
    
    
    $
    47,846
    
    
    $
    (8
    )
    
    $
    330,181
    
    
    $
    67,428
    
    
    $
    397,609Equity-settled share-based payment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    955
    
    
    
    
    
    
    
    
    
    
    
    955
    
    
    
    246
    
    
    
    1,201Repurchase of share options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (83
    )
    
    
    
    
    
    
    
    
    
    
    (83
    )
    
    
    
    
    
    
    (83
    )Dividend for noncontrolling interests
of subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,902
    )
    
    
    (8,902
    )Disposal of subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,843
    )
    
    
    (12,843
    )Purchases of
a subsidiarys shares from
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,312
    )
    
    
    (3,312
    )Consolidated net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,635
    
    
    
    
    
    
    
    30,635
    
    
    
    5,434
    
    
    
    36,069
    
    
    $
    36,069Consolidated comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    36,069Cash dividends ($0.88 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,427
    )
    
    
    
    
    
    
    (39,427
    )
    
    
    
    
    
    
    (39,427
    )Balance at December 31, 2008
    
    
    44,803,735
    
    
    $
    448
    
    
    $
    
    
    
    $
    282,767
    
    
    $
    39,054
    
    
    $
    (8
    )
    
    $
    322,261
    
    
    $
    48,051
    
    
    $
    370,312Equity-settled share-based payment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    67Purchases of a subsidiarys shares from
noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,430
    
    
    
    
    
    
    
    
    
    
    
    2,430
    
    
    
    (45,864
    )
    
    
    (43,434
    )Consolidated net income (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,652
    
    
    
    
    
    
    
    1,652
    
    
    
    (2,187
    )
    
    
    (535
    )
    
    $
    (535
    )Consolidated comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (535
    )Balance at December 31, 2009
    
    
    44,803,735
    
    
    $
    448
    
    
    $
    
    
    
    $
    285,264
    
    
    $
    40,706
    
    
    $
    (8
    )
    
    $
    326,410
    
    
    $
    
    
    
    $
    326,410
  F-5




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##### Table of Contents



NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
 Year ended December 31,2007
    
    
    2008
    
    
    2009Cash flows from operating activities:Consolidated net income (loss)
    
    $
    91,775
    
    
    $
    36,069
    
    
    $
    (535
    )Adjustments
to reconcile consolidated net income (loss) to net cash provided by operating
activities:Depreciation and amortization
    
    
    21,501
    
    
    
    22,208
    
    
    
    23,116Impairment loss on goodwill
    
    
    
    
    
    
    17,345
    
    
    
    (Gain) loss on disposal of property, plant and equipment
    
    
    (66
    )
    
    
    (13
    )
    
    
    1,248Gain on disposal of marketable securities
    
    
    (43,815
    )
    
    
    
    
    
    
    Gain on sale of a subsidiarys shares  Nam Tai Electronic & Electrical
products Limited (NTEEP)
    
    
    (325
    )
    
    
    
    
    
    
    Gain on sale of a subsidiarys shares  J.I.C. Technology Company
Limited (JIC Technology)
    
    
    (65
    )
    
    
    (20,206
    )
    
    
    Share-based compensation expenses
    
    
    389
    
    
    
    1,228
    
    
    
    67Dividend withheld
    
    
    
    
    
    
    (305
    )
    
    
    Unrealized exchange gain
    
    
    (813
    )
    
    
    (4,757
    )
    
    
    (39
    )Deferred income taxes
    
    
    (3,246
    )
    
    
    (793
    )
    
    
    (804
    )Changes in current assets and liabilities:Decrease (increase) in accounts receivable
    
    
    21,704
    
    
    
    (8,499
    )
    
    
    46,239(Increase) decrease in inventories
    
    
    (1,462
    )
    
    
    5,056
    
    
    
    11,246(Increase) decrease in prepaid expenses and other receivables
    
    
    (3,303
    )
    
    
    1,574
    
    
    
    1,069(Increase) decrease in income taxes recoverable
    
    
    (1,167
    )
    
    
    5,439
    
    
    
    Increase (decrease) increase in notes payable
    
    
    79
    
    
    
    (4,580
    )
    
    
    691Decrease in accounts payable
    
    
    (18,567
    )
    
    
    (9,201
    )
    
    
    (39,458
    )Increase (decrease) in accrued expenses and other payables
    
    
    8,041
    
    
    
    (4,233
    )
    
    
    (4,132
    )Increase (decrease) in income taxes payable
    
    
    390
    
    
    
    459
    
    
    
    (205
    )Total adjustments
    
    
    (20,725
    )
    
    
    722
    
    
    
    39,038Net cash provided by operating activities
    
    $
    71,050
    
    
    $
    36,791
    
    
    $
    38,503
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NAM TAI ELECTRONICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of US dollars)
 Year ended December 31,2007
    
    
    2008
    
    
    2009Cash flows from investing activities:Purchase of property, plant and
equipment
    
    $
    (13,785
    )
    
    $
    (27,407
    )
    
    $
    (30,420
    )Decrease (increase) in deposits for
property, plant and equipment
    
    
    73
    
    
    
    (2,606
    )
    
    
    2,905(Increase) decrease in entrusted loan
receivable
    
    
    
    
    
    
    (8,166
    )
    
    
    8,199Increase in prepayment for land use
rights
    
    
    (7,532
    )
    
    
    (663
    )
    
    
    (Increase) decrease in other assets
    
    
    (61
    )
    
    
    299
    
    
    
    Proceeds from disposal of marketable
securities
    
    
    53,914
    
    
    
    
    
    
    
    Net cash inflow from disposal of a
subsidiary  JIC Technology
    
    
    
    
    
    
    6,671
    
    
    
    Acquisition of additional shares in
subsidiaries
    
    
    (13,808
    )
    
    
    (2,906
    )
    
    
    (43,434
    )Proceeds from partial disposal of
subsidiaries  JIC Technology
and NTEEP
    
    
    7,287
    
    
    
    
    
    
    
    Proceeds from disposal of property,
plant and equipment
    
    
    522
    
    
    
    55
    
    
    
    872Increase in fixed deposits maturing
over three months
    
    
    
    
    
    
    
    
    
    
    (12,903
    )Net cash provided by (used in)
investing activities
    
    $
    26,610
    
    
    $
    (34,723
    )
    
    $
    (74,781
    )Cash flows from financing activities:Cash dividends paid
    
    $
    (47,796
    )
    
    $
    (47,675
    )
    
    $
    (9,857
    )Repayment of bank loans
    
    
    (1,972
    )
    
    
    (2,648
    )
    
    
    Payment on repurchase of share
options
    
    
    
    
    
    
    (110
    )
    
    
    Proceeds from bank loans
    
    
    2,670
    
    
    
    
    
    
    
    Proceeds from (repayment of)
entrusted loan
    
    
    
    
    
    
    8,166
    
    
    
    (8,199
    )Net cash used in financing activities
    
    $
    (47,098
    )
    
    $
    (42,267
    )
    
    $
    (18,056
    )Net increase (decrease) in cash and
cash equivalents
    
    
    50,562
    
    
    
    (40,199
    )
    
    
    (54,334
    )Cash and cash equivalents at beginning
of year
    
    
    221,084
    
    
    
    272,459
    
    
    
    237,017Effect of exchange rate changes on cash
and cash equivalents
    
    
    813
    
    
    
    4,757
    
    
    
    39Cash and cash equivalents at end of year
    
    $
    272,459
    
    
    $
    237,017
    
    
    $
    182,722Supplemental schedule of cash flow
information:Interest paid
    
    $
    452
    
    
    $
    356
    
    
    $
    202Income taxes paid (received), net
    
    
    7,697
    
    
    
    (2,497
    )
    
    
    2,290Non-cash investing activities:Increase (decrease) in
construction cost funded through
accrued expenses and other payables
    
    $
    
    
    
    $
    8,547
    
    
    $
    (5,438
    )
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NAM TAI ELECTRONICS, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of US dollars, except share and per share data)
 1.
    
    Company Information
 Nam Tai Electronics, Inc. and subsidiaries (the Company or Nam Tai) is an electronics
manufacturing and design services provider to a selected group of the worlds leading
original equipment manufacturers, or OEMs, of telecommunication and consumer electronic
products. Through its electronics manufacturing services operations, the Company
manufactures electronic components and sub-assemblies, including flexible printed circuit
(FPC) board, FPC board subassemblies, liquid crystal display (LCD) panels, LCD modules,
thin film transistor display modules, radio frequency modules, digital audio broadcast
modules, internet radio subassemblies, image sensors modules and printed circuit board
assemblies. These components, modules and subassemblies are used in numerous electronic
products including mobile phones, Internet Protocol phones, notebook computers, digital
cameras, electronic toys, handheld video game devices and learning devices. The Company also
manufactures finished products, including mobile phone accessories, home entertainment
products and educational products.The Company was founded in 1975 and moved its manufacturing facilities to the Peoples
Republic of China (the PRC) in 1980 to take advantage of lower overhead costs, lower
material costs and competitive labor rates available and subsequently relocated to
Shenzhen, the PRC in order to capitalize on opportunities offered in Southern PRC. The
Company was reincorporated as a limited liability International Business Company under
the laws of the British Virgin Islands (BVI) in August 1987 (which was amended in 2004
as The British Virgin Islands Business Companies Act, 2004). The Companys principal
manufacturing and design operations are based in Shenzhen, approximately 30 miles from
the Hong Kong Special Administrative Region (Hong Kong). Its PRC headquarters are
located in Shenzhen. Some of the subsidiaries offices are located in Hong Kong, which
provide them access to Hong Kongs infrastructure of communication and banking
facilities. As of December 31, 2009, one of the Companys subsidiaries also maintained an
office in Japan. The Companys principal manufacturing operations are conducted in the
PRC. The PRC resumed sovereignty over Hong Kong effective July 1, 1997, and politically,
Hong Kong is an integral part of the PRC. However, for simplicity and as a matter of
definition only, our references to PRC in these consolidated financial statements mean
the PRC and all of its territories excluding Hong Kong.The Company operates primarily in three reportable segments consisting of consumer
electronics and communication products (CECP), telecommunication components assembly
(TCA) and LCD products (LCDP).
 2.
    
    Summary of Significant Accounting Policies
 (a)
    
    Principles of consolidationThe consolidated financial statements include the financial statements of the Company
and all of its subsidiaries. The Company consolidates companies in which it has
controlling interest of over 50%. All significant intercompany accounts, transactions
and cash flows have been eliminated on consolidation.(b)
    
    Cash and cash equivalentsCash and cash equivalents include all cash balances and certificates of deposit
having a maturity date of three months or less upon acquisition.(c)
    
    Marketable securitiesMarketable securities are principally equity securities and are classified as
available-for-sale. Securities classified as available-for-sale are stated at fair
value with unrealized gains and losses recorded as a separate component of
accumulated other comprehensive income (loss). Realized gains and losses on the sale
of the available-for-sale securities are determined using the specific-identification
method and are reflected in income (expenses).
 
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2.
    
    Summary of Significant Accounting Policies  continued
 (d)
    
    Allowance for doubtful accountsAccounts receivable balance is recorded net of allowances for amounts not expected to be
collected from customers. Because the accounts receivable are typically unsecured, the
Company periodically evaluates the collectibility of accounts based on a combination of
factors, including a particular customers ability to pay as well as the age of the
receivables. To evaluate a specific customers ability to pay, the Company analyzes
financial statements, payment history, third-party credit analysis reports and various
information or disclosures by the customer or other publicly available information. In
cases where the evidence suggests a customer may not be able to satisfy its obligation
to the Company, a specific allowance would be set up for the perceived risk. If the
financial condition of customers  deteriorates, resulting in an impairment of
their ability to make payments, additional allowances may be required.(e)
    
    InventoriesInventories are stated at the lower of cost or market value. Cost is determined on
the first-in, first-out basis. Write downs of potentially obsolete or slow-moving
inventory are recorded based on managements analysis of inventory levels.For the Companys CECP and TCA reporting units, the Company orders inventory from its
suppliers based on firm customer orders for products that are unique to each
customer. The inventory is utilized in production as soon as all the necessary
components are received. The only reason that inventory would not be utilized within
six months is if a specific customer deferred or canceled an order. As the inventory
is typically unique to each customers products, it is unusual for the Company to be
able to utilize the inventory for other customers products. Therefore, the Companys
policy is to negotiate with the customer for the disposal of such inventory that
remains unused for six months. The Company does not generally write down its
inventories as usually, the customers are held to their purchase commitments.
However, there are cases where customers are contractually obligated to purchase the
unused inventory from the Company, but the Company may elect not to immediately
enforce such contractual right for business reasons. In this connection, the Company
will consider writing down these inventory items which remained unused for over six
months at the Companys own cost. Prior to writing down, management would determine
if the inventory can be utilized in other products.For the Companys LCDP segment, due to the nature of the business, LCDP customers do
not always place orders enough in advance to enable the Company to order inventory
from suppliers based on firm customer orders. Nonetheless, management reviews its
inventory balance on a regular basis and writes down all inventory over six months
old if it is determined that the relevant inventory cannot be utilized in the
foreseeable future.(f)
    
    Property, plant and equipment and land use rightProperty, plant and equipment and land use right are recorded at cost and include
interest on funds borrowed to finance construction, if applicable. No interest was
capitalized for the years ended December 31, 2007, 2008 and 2009. The cost of major
improvements and betterments is capitalized whereas the cost of maintenance and
repairs is expensed in the year incurred. Assets under construction are not
depreciated until construction is completed and the assets are ready for their
intended use. Gains and losses for the disposal of property, plant and equipment and
land use right are included in income.The majority of the land in Hong Kong is owned by the government of Hong Kong which
leases the land at public auction to non-governmental entities. All of the Companys
leasehold land in Hong Kong have leases of not more than 50 years from the respective
balance sheet dates. The cost of such leasehold land is amortized on a straight-line
basis over the respective terms of the leases.All land in other regions of the PRC is owned by the PRC government. The government
in the PRC, according to PRC law, may sell the right to use the land for a specified
period of time. Thus, all of the Companys land purchases in the PRC are considered
to be leasehold land and classified as land use right in the consolidated balance
sheets. They are amortized on a straight-line basis over the respective term of the
right to use the land.Since August 1, 2009, in order to reflect a more reasonable estimate on the useful
lives of the property, plant and equipment, the Company computed depreciation
expenses using the straight-line method at the following depreciation rates:
 
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2.
    
    Summary of Significant Accounting Policies  continued
 (f)
    
    Property, plant and equipment and land use right- continued
 Classification
    
    Prior to August 1, 2009
    
    After August 1, 2009Land use right
    
    50 years
    
    50 yearsBuildings
    
    20 to 50 years
    
    20 yearsMachinery and equipment
    
    4 to 12 years
    
    4 yearsLeasehold improvements
    
    shorter of lease term or 7 years
    
    shorter of lease term or 4 yearsFurniture and fixtures
    
    4 to 8 years
    
    4 yearsAutomobiles
    
    4 to 6 years
    
    4 yearsTools and molds
    
    4 to 6 years
    
    2 years
 The above change in depreciation rates decreased operating income, net income, basic and
diluted earnings per share by 2009 are $2,308, $1,643, $0.04 and $0.04, respectively.(g)
    
    GoodwillThe excess of the purchase price over the fair value of net assets acquired is
recorded on the consolidated balance sheet as goodwill.Goodwill is not amortized, but is tested for impairment at the reporting unit level at
least on an annual basis at the balance sheet date or more frequently if certain
indicators arise. The Company operates in three reporting units, which are its reportable
segments of CECP, TCA and LCDP. If business conditions or other factors cause the
profitability and cash flows of the reporting unit to decline, the Company may be
required to record impairment charges for goodwill at that time. The goodwill impairment
review is a two-step process in accordance with the Statement of Financial Accounting
Standard (SFAS) No. 142 Goodwill and Other Intangible Assets, which is now codified
as Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC)
350-20 Goodwill effective for interim and annual periods ending after September 15,
2009. First step consists of a comparison of the fair value of a reporting unit with its
carrying value. An impairment loss may be recognized if the review indicates that the
carrying value of a reporting unit exceeds its fair value. Estimates of fair value are
primarily determined by using discounted cash flows method. If the carrying amount of a
reporting unit exceeds its fair value, second step requires the fair value of the
reporting unit to be allocated to all of the assets and liabilities (including any
unrecognized intangible assets) of that reporting unit, resulting in an implied fair
value of goodwill. If the carrying amount of the goodwill of the reporting unit exceeds
the implied fair value, an impairment charge is recorded which is equal to the excess of the
carrying amount over the fair value.The impairment review is highly judgmental and involves the use of significant
estimates and assumptions. These estimates and assumptions have a significant impact
on the amount of any impairment charge recorded. Discounted cash flow methodology is
based on a number of estimates and assumptions, including the projected future
operating results of the reporting unit, discount rate, long-term growth rate and
appropriate market comparables.No impairment loss on goodwill was recognized in 2007 and 2009. Impairment loss on
goodwill on the LCDP reporting unit of $17,345, as more fully described in Note 5,
was identified and recognized in 2008.(h)
    
    Impairment or disposal of long-lived assetsLong-lived assets are included in impairment evaluations when events and circumstances
exist that indicate the carrying value of these assets may not be recoverable. In
accordance with SFAS No. 144 Accounting For the Impairment or Disposal of Long-Lived
Assets, which is now codified as FASB ASC 360 Property, Plant and Equipmenteffective
for interim and annual periods ending after September 15, 2009, the Company assesses the
recoverability of the carrying value of long-lived assets by first grouping its
long-lived assets with other assets and liabilities at the lowest level for which
identifiable cash flows largely independent of the cash flows of other assets and
liabilities (the asset group) and, secondly, estimating the undiscounted future cash
flows that are directly associated with and expected to arise from the use of and
eventual disposition of such asset group. The Company estimates the undiscounted cash
flows over the remaining useful life of the primary asset within the asset group. If the
carrying value of the asset group exceeds the estimated undiscounted cash flows, the
Company records an impairment charge to the extent the carrying value of the long-lived
asset exceeds its fair value. The Company determines fair value through quoted market
prices in active markets or, if quotations of market prices are unavailable, through the
performance of internal analysis using a discounted cash flow methodology or obtains
external appraisals from independent valuation firms. The undiscounted and discounted
cash flow analyses based on a number of estimates and assumptions, including the expected
period over which the asset will be utilized, projected future operating results of the
asset group, discount rate and long-term growth rate.
 
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2.
    
    Summary of Significant Accounting Policies  continued
 (h)
    
    Impairment or disposal of long-lived assets- continuedLong-lived assets to be disposed of are stated at the lower of fair value or carrying
value. Expected future operating losses from discontinued operations are recorded in the
periods in which the losses are incurred. During the fourth quarter of 2008, the market
price of the Companys shares first dropped to a level where, based on the daily closing
price of its shares from October 22, 2008 to December 31, 2008, the Companys market
capitalization was less than its book value at December 31, 2008. Accordingly, and
despite, the lack of a substantial history at the time that would indicate whether the
effect of prevailing market and economic conditions on the Companys stock price
reflected an aberration or a sustained decline, in accordance with FASB ASC 360, the
Company reviewed its long-lived assets of property, plant and equipment and land use
rights for potential impairment as at December 31, 2008. In view of the sustained level
of the Companys stock price during 2009 and its resulting market capitalization
throughout 2009 at a level below its recorded book value at December 31, 2009, the
Company conducted a similar review of Nam Tais long-lived assets for potential
impairment. The testing resulting from the Companys reviews of undiscounted projected
cash-flows associated with those assets indicated that the carrying value of the
Companys long-lived assets at December 31, 2008 and at December 31, 2009 to be less than
the fair value and the sum of undiscounted cash flows. Accordingly, the Company concluded
that the carrying values of Nam Tais long-lived assets were not impaired at December 31,
 2008 and 2009.(i)
    
    Accruals and provisions for loss contingenciesThe Company makes provisions for all loss contingencies when information available prior
to the issuance of the consolidated financial statements indicates that it is probable
that an asset has been impaired or a liability has been incurred at the date of the
consolidated financial statements and the amount of loss can be reasonably estimated.For provisions or accruals related to litigation, the Company makes provisions based on
information from legal counsels and the best estimation of management. The Company
assesses the potential liability for the significant legal proceedings in accordance with
Statement of Financial Accounting Standards No. 5, Accounting for Contingencies, or
SFAS 5 (which is now codified as FASB ASC 450 Contingencies). FASB ASC 450 requires a
liability to be recorded if the contingency loss is probable and the amount of loss can
be reasonably estimated. The actual resolution of the contingency may differ from the
Companys estimates. If the contingency was settled for an amount greater than the
estimate, a future charge to income would result. Likewise, if the contingency was
settled for an amount that is less than our estimate, a future credit to income would
result.(j)
    
    Revenue recognitionThe Company recognizes revenue when all of the following conditions are met:
 
    
    Persuasive evidence of an arrangement exists,
    
    Delivery has occurred or services have been rendered,
    
    Price to the customer is fixed or determinable, and
    
    Collectability is reasonably assured.
 Revenue from sales of products is recognized when the title is passed to customers upon
shipment and when collectability is reasonably assured. The Company does not provide its
customers with the right of return (except for quality), price protection, rebates or
discounts. There are no customer acceptance provisions associated with the Companys
products, except for quality. All sales are based on firm customer orders with fixed
terms and conditions, which generally cannot be modified.Certain of the Companys subsidiaries are subject to value-added tax of 17% on the
revenue earned for goods and services sold in the PRC. The Company presents revenue
net of such value-added tax which amounted to nil, $1,357 and $369 for the years
ended December 31, 2007, 2008 and 2009, respectively.(k)
    
    Shipping and handling costsShipping and handling costs are classified as cost of sales for materials purchased
and selling expenses for those costs incurred in the delivery of finished products.
During the years ended December 31, 2007, 2008 and 2009, shipping and handling costs
classified as costs of sales were $523, $503 and $363, respectively. During the years ended December 31, 2007, 2008 and 2009, shipping and handing costs
classified as selling expenses were $1,027, $840 and $669, respectively.
 
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2.
    
    Summary of Significant Accounting Policies  continued
 (l)
    
    Research and development costsResearch and development costs are incurred in the development of new products and
processes, including significant improvements and refinements to existing products
and are expensed as incurred.(m)
    
    Advertising expensesThe Company expenses advertising costs as incurred. Advertising expenses were $137,
$132 and $36 for the years ended December 31, 2007, 2008 and 2009, respectively.(n)
    
    Staff retirement plan costsThe Companys costs related to the staff retirement plans (see Note 11) are charged
to the consolidated statement of income as incurred.(o)
    
    Income taxesDeferred income taxes are provided using the asset and liability method. Under this
method, deferred income taxes are recognized for all significant temporary
differences at enacted rates and classified as current or non-current based upon the
classification of the related asset or liability in the consolidated financial
statements. A valuation allowance is provided to reduce the amount of deferred tax
assets if it is considered more likely than not that some portion of, or all, the
deferred tax asset will not be realized.The Company adopted FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes  an interpretation of FASB Statement No.
109 (FIN 48), which stipulates the accounting for uncertainty in
income taxes recognized in an enterprises financial statements, and
prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken
or expected to be taken in a tax return. It also provides accounting
guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. FIN 48 is now
included in and codified as FASB ASC 740 Income taxeseffective for
interim and annual periods ending after September 15, 2009.(p)
    
    Foreign currency transactions and translationsAll transactions in currencies other than functional currencies during the year are
translated at the exchange rates prevailing on the respective transaction dates.
Monetary assets and liabilities existing at the balance sheet date denominated in
currencies other than functional currencies are remeasured at the exchange rates
existing on that date. Exchange differences are recorded in the consolidated
statement of income.The functional currency of the Company and its subsidiaries include the U.S. dollar or
the Hong Kong dollar. The financial statements of all subsidiaries are translated in
accordance with SFAS No. 52, Foreign Currency Translation which is now codified as FASB
ASC 830 Foreign Currency Matterseffective for the interim and annual periods ending
after September 15, 2009. All assets and liabilities are translated at the rates of
exchange ruling at the balance sheet date and all income and expense items are translated
at the average rates of exchange over the year. All exchange differences arising from the
translation of subsidiaries financial statements are recorded as a component of
comprehensive income.The exchange rates between the Hong Kong dollar and the U.S. dollar were
approximately 7.7998, 7.7499 and 7.7543 as of December 31, 2007, 2008 and 2009,
respectively.(q)
    
    Earnings per shareBasic earnings per share is computed by dividing net income attributable to common
shareholders by the weighted average number of common shares outstanding during the
year.Diluted earnings per share gives effect to all dilutive potential common shares
outstanding during the year. The weighted average number of common shares
outstanding is adjusted to include the number of additional common shares that would
have been outstanding if the dilutive potential common shares had been issued.(r)
    
    Stock optionsThe Company has a stock-based employee compensation plan, as more fully described in
Note 9(b). The Company measures the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair value of the award. That
cost is recognized over the period during which an employee is required to provide
service, the requisite service period (usually the vesting period), in exchange for the
award. The grant-date fair value of employee share options and similar instruments are
estimated using option-pricing models. If the award is modified after the grant date,
incremental compensation cost is recognized in an amount equal to the excess of the
fair value of the modified award over the fair value of the original award immediately
before the modification.
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2.
    
    Summary of Significant Accounting Policies  continued
 (s)
    
    Use of estimatesThe preparation of consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates.(t)
    
    Comprehensive income (loss)Accumulated other comprehensive income (loss) represents principally unrealized gains
and losses on marketable securities and foreign currency translation adjustments and
is included in the consolidated statement of changes in equity.(u)
    
    Fair value of financial instrumentsThe carrying amounts of cash and cash equivalents, fixed
deposits maturing over three months, accounts receivable, other
receivable, entrusted loan receivable, notes payable, accounts payable, other
payables, dividend payable and entrusted loan payable approximate their fair values
due to the short term nature of these instruments. The carrying amount of long term
debt also approximates fair value due to the variable nature of the interest
calculations.In September 2006, the FASB issued SFAS No. 157 Fair Value Measurements (SFAS 157).
SFAS 157 defines fair value, establishes a framework for measuring fair value, and
enhances fair value measurement disclosure. In October 2008, the FASB issued FASB Staff
Position (FSP) 157-3 Determining the Fair Value of a Financial Asset When the Market
for That Asset Is Not Active (FSP SFAS 157-3). FSP SFAS 157-3 clarifies the
application of SFAS 157 in a market that is not active, and provides guidance on the key
considerations in determining the fair value of a financial asset when the market for
that financial asset is not active. Effective January 1, 2008, the Company adopted the
measurement and disclosure requirements related to financial assets and financial
liabilities. The adoption of SFAS 157 for financial assets and financial liabilities did
not have a material impact on the Companys results of operations or the fair values of
its financial assets and liabilities.FSP SFAS 157-2, Effective Date of FASB Statement No. 157 (FSP SFAS 157-2) delayed
the effective date of SFAS 157 for all nonfinancial assets and nonfinancial
liabilities, except for items that are recognized or disclosed at fair value in the
financial statements on a recurring basis (at least annually), until the fiscal year
beginning after November 15, 2008. The application of SFAS 157 to nonfinancial assets
and liabilities did not have a material impact on the Companys results of operations
and financial position.In April 2009, the FASB issued FSP SFAS 157-4, Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly.It amends the other-than-temporary
impairment guidance in Accounting Principle Generally Accepted in the United States
(U.S. GAAP) for debt securities to make the guidance more operational and to improve the
presentation and disclosure of other-than-temporary impairments on debt and equity
securities in the financial statements. This FSP does not amend existing recognition and
measurement guidance related to other-than-temporary impairments of equity securities.
FAS 157-4 is effective for the interim and annual periods ending after June 15, 2009 and
the adoption of FAS 157-4 did not have a material impact on the Companys results of
operations and financial position.SFAS 157 is now codified as FASB ASC 820 Fair Value Measurements and Disclosures
effective for interim and annual periods ending after September 15, 2009. The adoption
of FASB ASC 820 did not have a material impact on the Companys results of operations
and financial position.As of December 31, 2008 and 2009, the Company did not have any nonfinancial assets
and liabilities that are recognized or disclosed at fair value in the financial
statements, at least annually, on a recurring basis.(v)
    
    Recent changes in accounting standardsIn February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial LiabilitiesIncluding an amendment of FASB Statement No. 115 (SFAS
159). Under SFAS 159, a company may choose, at specified election dates, to measure
eligible items at fair value and report unrealized gains and losses on items for which
the fair value option has been elected in earnings at each subsequent reporting date.
Effective January 1, 2008, the Company adopted SFAS 159, which is now codified as FASB
ASC 825-10-50-28 Financial Instruments  overall  disclosure  Fair value Option, but
the Company has not elected the fair value option for any eligible financial instruments
as of December 31, 2008 and 2009.
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2.
    
    Summary of Significant Accounting Policies  continued
 (v)
    
    Recent changes in accounting standards- continuedIn December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combination
(SFAS 141R). SFAS 141R is relevant to all transactions or events in which one entity
obtains control over one or more other businesses. SFAS 141R requires an acquirer to
recognize any assets and noncontrolling interest acquired and liabilities assumed to be
measured at fair value as of the acquisition date. Liabilities related to contingent
consideration are recognized and measured at fair value on the date of acquisition rather
than at a later date when the amount of the consideration may be resolved beyond a
reasonable doubt. This revised approach replaces SFAS 141s cost allocation process in
which the cost of an acquisition was allocated to the individual assets acquired and
liabilities assumed based on their respective fair value. SFAS 141R requires any
acquisition-related costs and restructuring costs to be expensed as incurred as opposed
to allocating such costs to the assets acquired and liabilities assumed as previously
required by SFAS 141. Under SFAS 141R, an acquirer recognizes liabilities for a
restructuring plan in purchase accounting only if the requirements of SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities, are met. SFAS 141R
allows for the recognition of pre-acquisition contingencies at fair value only if these
contingencies are likely to materialize. If this criterion is not met at the acquisition
date, then the acquirer accounts for the non-contractual contingency in accordance with
recognition criteria set forth under SFAS No. 5, Accounting for Contingencies, in which
case no amount should be recognized in purchase accounting. SFAS 141R is effective as of
the beginning of an entitys first fiscal year that begins after December 15, 2008, which
is now codified as FASB ASC 805 Business Combination. The adoption of SFAS 141R did not
have a material impact on the Companys financial position, results of operations and
cash flows.In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements  An Amendment of ARB No. 51(SFAS 160). This Statement
amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling
interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a
noncontrolling interest in a subsidiary is an ownership interest in the consolidated
entity and should be reported as equity on the financial statements. SFAS 160 requires
consolidated net income to be reported at amounts that include the amounts attributable
to both the parent and the noncontrolling interest. Furthermore, disclosure of the
amounts of consolidated net income attributable to the parent and to the noncontrolling
interest is required on the face of the financial statements. SFAS 160 is effective as of
the beginning of an entitys first fiscal year that begins after December 15, 2008 and
now is codified as FASB ASC 810-10-45-16 Consolidation Overall Other Presentation
Matter  Noncontrolling Interest in a Subsidiary. Accordingly, in 2009, minority interests has been renamed noncontrolling
 interests, consolidated net income (loss) is reported at amounts that include the amounts attributable to both
noncontrolling interests and Nam Tais shareholders for all periods presented. In addition,
noncontrolling interests has been reported as a component of equity in the consolidated balance
sheets and consolidated statements of changes in equity and comprehensive income for all
periods presented. The Company has retrospectively applied the presentation to its prior year
balances in the consolidated financial statements.In April 2008, the FASB issued FSP SFAS 142-3, Determination of the Useful Life of
Intangible Assets.This FSP amends the factors that should be considered in developing
renewal or extension assumptions used to determine the useful life of a recognized
intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets. This FSP is
effective for fiscal years beginning after December 15, 2008 and interim periods within
those fiscal years. The guidance for determining the useful life of a recognized
intangible asset in this FSP shall be applied prospectively to intangible assets
acquired after the effective date. This FSP is now codified as FASB ASC 350-20,
Intangibles  Goodwill and Other Goodwill effective for interim and annual periods
ending after September 15, 2009. The adoption of FASB ASC 350-20 did not have a material
impact on the Companys financial position, results of operations and cash flows.In June 2008, the FASB issued FSP Emerging Issues Task Force (EITF) 03-6-1,
Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities.This FSP gives guidance on the computation of earnings per
share and the impact of share-based instruments that contain certain non-forfeitable
rights to dividends or dividend equivalents. The FSP is effective for fiscal years
beginning after December 31, 2008 and is now codified as FASB-ASC 718
Compensation-Stock Compensation effective for interim and annual periods ending
after September 15, 2009. The adoption of FASB-ASC 718 did not have a material impact
on the Companys financial position, results of operations and cash flows.In November 2008, the FASB ratified the consensus reached by the Task Force in EITF
Issue 08-7, Accounting for Defensive Intangible Assets(EITF 08-7). EITF 08-7
requires entities that will acquire a defensive intangible asset after the effective
date of SFAS 141R which is now codified as FASB ASC 805 Business Combination effective
for interim and annual periods ending after September 15, 2009, to account for the
acquired intangible asset as a separate unit of accounting and amortize the acquired
intangible asset over the period during which the asset would diminish in value. EITF
08-7 is effective for defensive intangible assets acquired in fiscal years beginning on
or after December 15, 2008. The adoption of EITF 08-7 did not have a material impact on
the Companys financial position, results of operations and cash flows.
 
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2.
    
    Summary of Significant Accounting Policies  continued
 (v)
    
    Recent changes in accounting standards- continuedIn April 2009, the FASB issued FSP SFAS 141(R)-1, Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from Contingencies . FAS
141(R)-1 amends and clarifies FASB Statement No. 141 (revised 2007), Business
Combinations, to address application issues raised by preparers, auditors, and members
of the legal profession on initial recognition and measurement, subsequent measurement
and accounting, and disclosure of assets and liabilities arising from contingencies in a
business
combination. FAS 141(R)-1 is effective for the interim and annual periods ending after
June 15, 2009, which is now codified as FASB ASC 805 Business Combination. The
adoption of FASB ASC 805 did not have a material impact on the Companys financial
position, results of operations and cash flows.In April 2009, the FASB issued FSP SFAS 115-2 and FAS 124-2, Recognition and
Presentation of Other-Than-Temporary Impairments. FAS 115-2 and FAS 124-2 amends the
other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the
guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. This FSP does not amend existing recognition and measurement guidance
related to other-than-temporary impairments of equity securities. FSP SFAS 115-2 and FAS
124-2 are effective for the interim and annual periods ending after June 15, 2009, which
is now codified as FASB ASC 320 Investments  Debt and Equity Securities. The adoption
of FASB ASC 320 did not have a material impact on the Companys financial position,
results of operations and cash flows.In April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, Interim Disclosures about
Fair Value of Financial Instruments. FSP amends SFAS 107, Disclosures about Fair Value
of Financial Instruments, to require disclosures about fair value of financial
instruments for interim reporting periods of publicly traded companies as well as in
annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial
Reporting, to require those disclosures in summarized financial information and is
effective for the interim and annual periods ending after June 15, 2009. SFAS 107 is now
codified as FASB ASC 825-10-50 Financial Instrument-Overall-Disclosure.The adoption of FASB ASC
825-10-50 did not have a material impact on the Companys financial position, results of
operations and cash flows.In May 2009, the FASB issued FSP SFAS 165 Subsequent Events.The objective of this
Statement is to establish general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are issued or
are available to be issued. SFAS 165 is effective for the interim and annual periods
ending after June 15, 2009, which is now codified as FASB ASC 855 Subsequent Events.
The adoption of FASB ASC 855 did not have a material impact on the Companys financial
position, results of operations and cash flows. Effective February 24, 2010, the Company adopted Accounting Standards Update
(ASU) No. 2010-09, Subsequent Events (Topic 855): Amendments to Certain
Recognition and Disclosure Requirements, which removes the requirement to
disclose the date through which subsequent events have been evaluated. The
adoption of the ASU did not have a material impact on the Companys financial
position, results of operations and cash flows.In June 2009, the FASB issued FSP SFAS 166, Accounting for Transfers of Financial
Assetsan amendment of FASB Statement No. 140.The objective of this Statement is to
improve the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial reports about a transfer
of financial assets; the effects of a transfer on its financial position, financial
performance, and cash flows; and a transferors continuing involvement in transferred
financial assets. SFAS 166 is effective for the interim and annual periods ending after
June 15, 2009, which is now codified as FASB ASC 860-10 Transfers and Servicing -
Overall. The adoption of FASB ASC 860-10 did not have a material impact on the
Companys financial position, results of operations and cash flows.In June 2009, the FASB issued FSP SFAS 167 Amendments to FASB Interpretation No. 46
The objective of this Statement is to amend certain requirements of FASB Interpretation
No. 46 (revised December 2003), Consolidation of Variable Interest Entities,to improve financial reporting by
enterprises involved with variable interest entities and to provide more relevant and
reliable information to users of financial statements. SFAS 167 is effective for the
interim and annual periods ending after June 15, 2009, which is now codified as FASB ASC
810-10-50-2A Consolidation  Overall  Disclosure  Variable Interest Entities. The
adoption of FASB ASC 810-10-50-2A did not have a material impact on the Companys
financial position, results of operations and cash flows.In June 2009, the FASB issued SFAS 168, The FASB Accounting Standards
CodificationTMand the Hierarchy of Generally Accepted Accounting Principles
- a replacement of FASB Statement No 162, which supersedes all existing
non-SEC accounting and reporting standards. The codification does not change GAAP but
rather organizes it into a new hierarchy with two levels: authoritative and
non-authoritative. All authoritative GAAP carries equal weight and is organized in a
topical structure. The adoption of SFAS 168 did not have a material impact on the
Companys financial position, results of operations and cash flows.
 
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2.
    
    Summary of Significant Accounting Policies  continued
 (v)
    
    Recent changes in accounting standards- continuedIn August 2009, the FASB issued ASU No. 2009-05, Fair
Value Measurements and Disclosures (Topic 820). This ASU applies to all entities that
measure liabilities at fair value within the scope of Topic 820 and provides
clarification on how to measure liabilities at fair value when a quoted price in an active
market is not available and clarify that it is not required to include a separate input
or adjustment to other inputs relating to a restriction of transfer of liabilities. The
adoption of ASU No. 2009-05 did not have a material impact on the Companys financial
position, results of operations and cash flows.In September 2009, the FASB issued ASU No. 2009-06, Income Taxes (Topic
740)Implementation Guidance on Accounting for Uncertainty in Income Taxes and
Disclosure Amendments for Nonpublic Entities, and it provides implementation guidance
on accounting for uncertainty in income taxes effective for interim and annual reporting
period ending on or after September 15, 2009. The adoption of ASU No. 2009-06 did not
have any impact on the Companys financial position, results of operations and cash
flows.In September 2009, the FASB issued ASU No. 2009-12, Fair Value Measurements
and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset
Value per Share (or Its Equivalent).This update applies to all entities that hold an
investment that is required to be measured or disclosed at fair value on a recurring or
nonrecurring basis. These amendments permit, as a practical expedient, a reporting
entity to measure the fair value of investment on the basis of the net asset value per
share of the investment and require disclosures by major category of investment within
the scope of this update. ASU No. 2009-12 is effective for interim and annual
periods ending after December 15, 2009 and the adoption is not
expected to  have a material impact
on the Companys financial position, results of operations and cash flows.In December 2009, the FASB issued ASU No. 2009-17, Consolidations (Topic 810):
Improvements to Financial Reporting by Enterprises Involved with Variable
Interest Entities. The amendments in this update are the result of FASB Statement No.
167 Amendments to FASB Interpretation No. 46 (R), which is now codified as FASB ASC
810-10-50-2A Consolidation  Overall  Disclosure  Variable Interest Entitiesand is
effective for the interim and annual periods ending after December 15, 2009. The adoption
of ASU No. 2009-17 is not expected to have a material impact on the Companys financial
position, results of operations and cash flows.In January 2010, the FASB issued ASU No. 2010-02, Consolidation (Topic 810), in
which it clarifies that the scope of the decrease in ownership provision of the Subtopic
and related guidance applies to a subsidiary or group of assets that is a business or
nonprofit activity, but does not apply to sales of substance real estate & conveyances of
oil and gas mineral rights. ASU No. 2010-02 is effective for the interim and annual
periods ending after December 15, 2009. The adoption of ASU No. 2010-02 is not expected
to have a material impact on the Companys financial position, results of operations and
cash flows.
 3.
    
    InventoriesInventories consist of the following:
 At December 31,
    
    2008
    
    
    2009Raw materials
    
    $
    16,910
    
    
    $
    11,401Work-in-progress
    
    
    4,351
    
    
    
    1,879Finished goods
    
    
    6,039
    
    
    
    2,774$
    27,300
    
    
    $
    16,054
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4.
    
    Property, Plant and Equipment, netProperty, plant and equipment, net consist of the following:
 At December 31,
    
    2008
    
    2009At cost:Buildings
    
    $
    50,497
    
    
    $
    89,335Machinery and equipment
    
    
    122,448
    
    
    
    127,369Leasehold improvements
    
    
    30,782
    
    
    
    29,239Furniture and fixtures
    
    
    2,631
    
    
    
    2,771Automobiles
    
    
    1,110
    
    
    
    1,107Tools and molds
    
    
    263
    
    
    
    235Total
    
    
    207,731
    
    
    
    250,056Less: accumulated depreciation
    
    
    (128,192
    )
    
    
    (146,751
    )79,539
    
    
    
    103,305Construction in progress
    
    
    28,528
    
    
    
    4,805Net book value
    
    $
    108,067
    
    
    $
    108,110
 Depreciation expenses were $21,414, $21,901 and $22,819 for the years ended December 31, 2007,
2008 and 2009 respectively.
 5.
    
    Goodwill
 A summary of the changes in the carrying value of goodwill, by reporting unit, is as
follows:
 CECP
    
    
    LCDPreporting
    
    
    reportingunit
    
    
    unit
    
    
    TotalBalance at January 1, 2008
    
    $
    2,951
    
    
    $
    17,345
    
    
    $
    20,296Impairment loss on goodwill
    
    
    
    
    
    
    (17,345
    )
    
    
    (17,345
    )Balance at December 31, 2008 and 2009
    
    $
    2,951
    
    
    $
    
    
    
    $
    2,951
 In 2008, the Company performed the first step of its goodwill impairment test for each of its
reporting units and determined that the carrying value of the LCDP reporting unit exceeded its
fair value in 2008 due to a combination of factors, including the deteriorating macro-economic
environment which resulted in a significant decline in customer demand, intense pricing
pressure and increasing competition of LCDP reporting unit. The fair value of the LCDP
reporting unit was estimated using a discounted cash flow methodology. Having determined that
the goodwill of the LCDP reporting unit was potentially impaired, the Company began performing
the second step of the goodwill impairment analysis which involves calculating the implied
fair value of its goodwill by allocating the fair value of the reporting unit to all of its
assets and liabilities other than goodwill and comparing the residual amount to the carrying
value of goodwill. Accordingly, the Company recorded a goodwill impairment loss of $17,345 on
the LCDP reporting unit for the year ended December 31, 2008.In 2009, the fair value of the CECP reporting unit was determined using a discounted cash flow
methodology, based on a discount rate of 9.8% and expected future cash flows. The expected
future cash flows were based on a five-year plan (after taking into account of the impact of
the current financial crisis) provided by management and with a reasonable growth rate
covering the five-year period as well as the period beyond. The Company completed its annual
impairment analysis for 2009 and concluded that the fair value of the CECP reporting unit
exceeded its carrying value as of December 31, 2009. Therefore, no impairment loss was
recognized in 2009.
 
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6.
    
    Investments
 (a)
    
    Investments in available-for-sale marketable securitiesIn January 2002, the Company acquired a 6% equity interest in TCL Holdings
Corporation Ltd., now known as TCL Corporation, for a consideration of $11,968. TCL
Corporation, an enterprise established in the PRC, is the parent company of the TCL
Group of companies. TCL Corporations scope of business includes the import and
export of raw materials, the design, manufacturing and sales and marketing of
telephones, VCD players, color television sets, mobile phones and other consumer
electronic products. TCL Corporation changed from a limited liability company to a
company limited by shares in April 2002 (the Establishment Date).In January 2004, TCL Corporation listed its A-shares on the Shenzhen Stock Exchange
at RMB4.26 (equivalent to US$0.52) per A-share. The Companys interest in TCL
Corporation was then diluted to 3.69% and represented 95.52 million promoters shares
of TCL Corporation after its initial public offering. According to Article 147 of
the Company Law of the PRC, the Company was restricted to transfer its promoters shares
within three years from the Establishment Date. The Company was, however,
entitled to dividend and other rights similar to the holders of A-shares.In April 2006, pursuant to the Split Share Structure Reform (SSR) of TCL Corporation,
the Companys interest in TCL Corporation was changed from 95,516,112 promoter shares
to 80,600,173 A-shares diluting its interest from 3.69% to 3.12%. As a result of the
reduction in the number of shares in TCL Corporation, the Company recorded a loss of $1.3
million ($1.9 million before sharing with noncontrolling interests). The A-shares became
tradable on the Shenzhen Stock Exchange after the expiration of 12 months from April 20,
2006, which was the first trading day after the SSR was formally implemented.In April 2007, the Company disposed of its entire interest in the A-shares of TCL
Corporation through the Shenzhen Stock Exchange. The net proceeds from the disposal
were $54 million (net of commission, expenses and stamp duty), resulting in a gain of
approximately $43.8 million.
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6.
    
    Investments  continued
 (b)
    
    Investments in Subsidiaries
 Percentage of ownershipSubsidiaries
    
    Place of
    
    Principal
    
    as at December 31,incorporation
    
    activity
    
    2008
    
    2009Consolidated principal subsidiaries:Jetup Electronic (Shenzhen) Co., Ltd. (Jetup)
    
    PRC
    
    Manufacturing and trading
    
    
    74.88
    %
    
    
    100
    %NTEEP
    
    Cayman Islands
    
    Investment holding
    
    
    74.88
    %
    
    
    100
    %Nam Tai Group Management Limited (NTGM)
    
    Hong Kong
    
    Inactive
    
    
    100
    %
    
    
    100
    %Nam Tai Holdings Limited
    
    BVI
    
    Investment holding
    
    
    74.88
    %
    
    
    100
    %Nam Tai Investments Consultant
(Macao Commercial Offshore)
Company Limited
    
    Macao
    
    Inactive
    
    
    74.88
    %
    
    100
    %(1)Namtai Japan Company Limited
    
    Japan
    
    Provision of sales 

co-ordination and
marketing services
    
    
    74.88
    %
    
    100
    %(1)Nam Tai Investment Limited
    
    Hong Kong
    
    Investment holding
    
    
    74.88
    %
    
    
    100
    %Nam Tai Telecom (Hong Kong) Company Limited
    
    Hong Kong
    
    Inactive
    
    
    100
    %
    
    
    100
    %Nam Tai Trading Company
Limited (NTTC)
    
    Hong Kong
    
    Inactive
    
    
    100
    %
    
    
    100
    %Namtai Electronic (Shenzhen)
Co., Ltd. (NTSZ)
    
    PRC
    
    Manufacturing and trading
    
    
    74.88
    %
    
    
    100
    %Zastron Electronic (Shenzhen)
Co. Ltd. (Zastron Shenzhen)
    
    PRC
    
    Manufacturing and trading
    
    
    74.88
    %
    
    
    100
    %Zastron Precision-Tech Limited (ZPTL)
    
    Cayman Islands
    
    Investment holding
    
    
    74.88
    %
    
    
    (2)Zastron (Macao Commercial Offshore) Company Limited
    
    Macao
    
    Inactive
    
    
    74.88
    %
    
    100
    %(1)Wuxi
Zastron Precision-Tech Co., Ltd. (Wuxi  Zastron Tech)
    
    PRC
    
    Manufacturing and
trading
    
    
    74.88
    %
    
    
    100
    %Wuxi
Zastron Precision-Flex Co., Ltd. (Wuxi  Zastron Flex)
    
    PRC
    
    Manufacturing and trading
    
    
    74.88
    %
    
    
    100
    %
 (1)
    
    In the process of de-registration as of December 31, 2009.(2)
    
    Disposed to a director of the Company, at a consideration of $0.1.
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6.
    
    Investments  continued
 (b)
    
    Investments in Subsidiaries  continuedSignificant transactions
 (i)
    
    In May 2007, the Company acquired a total of 54,514,000 ordinary
 shares of NTEEP for cash consideration of $13,054. In June 2007, the Company
disposed of a total of 29,199,000 ordinary shares of NTEEP for cash
considerations of approximately $6,586. The disposal resulted in a net gain on
partial disposal of a subsidiary of approximately $325 after deducting the
goodwill of $134. The acquisition and disposal resulted in 73.18% equity
interest held in NTEEP as of December 31, 2007.In May, June and July 2008, the Company further acquired a total of 14,986,000
ordinary shares of NTEEP for cash consideration of $2,906 resulting in 74.88%
equity interest held in NTEEP as of December 31, 2008.In 2009, the Company acquired all of the outstanding
221,455,118 ordinary shares of NTEEP for a cash consideration of $43,434
and completed the privatization of NTEEP. As a result of the
privatization, the additional paid-in capital increased by $2,430 in
2009.(ii)
    
    In December 2007, the Company completed its reorganization of
internal structure involving its two former Hong Kong Stock Exchange (SEHK)
listed subsidiaries, NTEEP and JIC Technology (Reorganization). The purpose of
the Reorganization was for the Company to centralize all electronic
manufacturing services (EMS) business into NTEEP and non-EMS business into JIC
Technology. The result was to turn NTEEP into a flagship EMS provider.Pursuant to the Reorganization, NTEEP acquired 100% equity interests in ZPTL
and 100% equity interests in Jetup from the Company while JIC Technology
acquired 100% equity interest in both Shenzhen Namtek Company Limited (Namtek
Shenzhen) and Namtek Japan Company Limited (Namtek group).Upon the completion of the Reorganization, the Companys effective
shareholding in Namtek group increased from 73.18% to 74.99% while the
effective shareholding in ZPTL and Jetup decreased from 100% to 73.18%, and
74.99% to 73.18%, respectively. The Company continued to own 73.18% and 74.99%
equity interest in NTEEP and JIC Technology respectively as of December 31,
2007.(iii)
    
    In February 2008, the Company entered into a share purchase
agreement with an independent third party, pursuant to which the Company agreed
to sell its entire interest in JIC Technology and its subsidiaries to this
independent third party for a cash consideration of approximately $51,100. The
disposal completed in March 2008 and resulted in a net gain of approximately
$20,206. Upon the completion of the disposal, the Company no longer has any
equity interest in JIC Technology and its subsidiaries, including the Namtek
group.
 Retained earnings and reservesThe Companys retained earnings are not restricted as to the payment of dividends
except to the extent dictated by prudent business practices. The Company believes
that there are no material restrictions, including foreign exchange controls, on the
ability of its non-PRC subsidiaries to transfer surplus funds to the Company in the
form of cash dividends, loans, advances or purchases. With respect to the Companys
PRC subsidiaries, there are restrictions on the payment of dividends and the
distribution of dividends from the PRC. On March 16, 2007, the PRC promulgated the
Law of the PRC on Enterprise Income Tax (the New Law) by Order No. 63 of the
President of the PRC. Please refer to Note 12 for further details of the New Law. The
New Law became effective from January 1, 2008. Prior to the enactment of the New Law,
when dividends are paid by the Companys PRC subsidiaries, such dividends would
reduce the amount of reinvested profits and accordingly, the refund of taxes paid
might be reduced to the extent of tax applicable to profits not reinvested.
Subsequent to the enactment of the New Law, due to the removal of tax benefit related
to reinvestment of capital in PRC subsidiaries, the Company may not reinvest the
profits made by the PRC subsidiaries. Payment of dividends by PRC subsidiaries to
foreign investors on profits earned subsequent to January 1, 2008 will also be
subject to withholding tax under the New Law. In addition, pursuant to the relevant
PRC regulations, a certain portion of the profits made by these subsidiaries must be
set aside for future capital investment and are not distributable, and the registered
capital of the Companys PRC subsidiaries are also restricted. These reserves and
registered capital of the PRC subsidiaries amounted to $270,509 and $270,548 as of
December 31, 2008 and 2009, respectively. However, the Company believes that such
restrictions will not have a material effect on the Companys liquidity or cash
flows.
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7.
    
    Accrued expenses and other payables
 Accrued expenses and other payables consisted of the following:
 At December 31,
    
    2008
    
    
    2009Accrued salaries
    
    $
    3,661
    
    
    $
    3,258Accrued bonus
    
    
    2,162
    
    
    
    844Accrued tooling and equipment charges
    
    
    2,597
    
    
    
    2,112Accrued professional fees
    
    
    3,623
    
    
    
    1,826Construction payable
    
    
    8,223
    
    
    
    2,785Others
    
    
    5,701
    
    
    
    5,572$
    25,967
    
    
    $
    16,397
 8.
    
    Bank Loans and Banking Facilities
   At December 31,
    
    2008
    
    2009Usance bills pending maturity
    
    $
    
    
    
    $
    985Total banking facilities utilized
    
    
    
    
    
    
    985Less: Outstanding letters of credit
    
    
    
    
    
    
    (294
    )Notes payable
    
    $
    
    
    
    $
    691
  9.
    
    Equity
 (a)
    
    The Company has only one class of common shares authorized, issued and
outstanding.(b)
    
    Stock Options
 In May 2001 (and amended in July 2004 and in November 2006), the Board of Directors
approved a stock option plan which would grant 15,000 options to each non-employee
director of the Company elected at each annual general meeting of shareholders, and
might grant options to key employees, consultants or advisors of the Company or any
of its subsidiaries to subscribe for its shares in accordance with the terms of this
stock option plan based on past performance and/or expected contributions to the
Company. The maximum number of shares to be issued pursuant to the exercise of
options granted was 3,300,000 shares. The options granted under this plan generally
have a term of two to three years, subject to the discretion of the Board of
Directors, but cannot exceed ten years.
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9.
    
    Equity  continued
 (b)
    
    Stock Options  continued
 In February 2006, the Board of Directors approved another stock option plan, which
was subsequently approved by the shareholders at the 2006 annual general meeting of
shareholders, with the same terms and conditions. However, the maximum number of
 shares to be issued pursuant to exercise of options granted was 2,000,000 shares.A summary of stock option activity during the three years ended December 31, 2009 is
as follows:
 WeightedaverageNumber of
    
    
    exercise
    
    
    Weighted averageoptions
    
    
    price
    
    
    fair value per optionOutstanding and exercisable at January 1, 2007
    
    
    780,000
    
    
    $
    21.09
    
    
    $
    6.78Granted
    
    
    115,000
    
    
    
    12.32
    
    
    
    2.80Expired
    
    
    (600,000
    )
    
    
    20.84
    
    
    
    6.77Outstanding and exercisable at December 31, 2007
    
    
    295,000
    
    
    $
    18.19
    
    
    $
    5.24Granted
    
    
    175,000
    
    
    
    10.79
    
    
    
    1.34Expired
    
    
    (90,000
    )
    
    
    21.62
    
    
    
    6.95Canceled
    
    
    (140,000
    )
    
    
    10.51
    
    
    
    1.71Repurchased
    
    
    (225,000
    )
    
    
    15.57
    
    
    
    3.62Outstanding and exercisable at December 31, 2008
    
    
    15,000
    
    
    $
    22.25
    
    
    $
    6.64Granted
    
    
    75,000
    
    
    
    4.41
    
    
    
    0.89Expired
    
    
    (15,000
    )
    
    
    22.25
    
    
    
    6.64Outstanding and exercisable at December 31, 2009
    
    
    75,000
    
    
    $
    4.41
    
    
    $
    0.89
 In October 2008, 225,000 stock options were repurchased and canceled by the
Company. The repurchase prices of these options were the same as the fair values of
these options calculated on the date of repurchase and the amounts paid for the
repurchases were charged to equity.Details of the options granted by the Company in 2007, 2008 and 2009 are as follows:
 Number of
    
    
    
    Exerciseoptions granted
    
    Vesting period
    
    price
    
    Exercisable periodIn 200775,000
    
    
    100% vested at date of grant
    
    $
    12.42
    
    
    June 8, 2007 to June 7, 2010 (note 1)40,000
    
    
    100% will vest one year
after date of grant
    
    $
    12.13
    
    
    May 14, 2008 to May 13, 2011 (note 2)In 200850,000
    
    
    100% vested at date of grant
    
    $
    9.86
    
    
    February 5, 2008 to February 4, 2011 (note 2)75,000
    
    
    100% vested at date of grant
    
    $
    12.03
    
    
    June 6, 2008 to June 5, 2011 (note 1)50,000
    
    
    100% vested at date of grant
    
    $
    9.86
    
    
    September 24, 2008 to September 24, 2011 (note 2)In 200975,000
    
    
    100% vested at date of grant
    
    $
    4.41
    
    
    June 5, 2009 to June 4, 2012
 Notes:1.
    
    These options were repurchased during 2008.2.
    
    These options were canceled during 2008.
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9.
    
    Equity  continued
 (b)
    
    Stock Options  continuedAs of December 31, 2009, there were no non-vested stock options. The total amount of
recognized compensation expense in 2007, 2008 and 2009 was $353, $955 and $67,
respectively.The following summarizes information about stock options outstanding at December 31,
2009. 75,000 stock options are exercisable as of December 31, 2009.
 Weighted averageNumber
    
    remaining contractualWeighted average exercise price
    
    of options
    
    life in months$4.41
    
    
    75,000
    
    
    
    29.1
 The weighted average remaining contractual life of the stock options outstanding
at December 31, 2007 2008 and 2009 was approximately 20, 5 and 29 months,
respectively. The weighted average fair value of options granted during 2007, 2008
and 2009 was $2.80, $1.34 and $0.89, respectively, using the Black-Scholes
option-pricing model based on the following assumptions:
 Year ended December 31,
    
    2007
    
    2008
    
    2009Risk-free interest rate
    
    4.63% to 5.03%
    
    2.08% to 2.73%
    
    1.5%Expected life
    
    3 to 4 years
    
    3 years
    
    3 yearsExpected volatility
    
    37.22% to 55.09%
    
    35.49% to 38.00%
    
    52.34%Expected dividend yield
    
    9.42%
    
    8.16%
    
    9.98%
 (c)
    
    Share Buy  backNo shares were repurchased during the years ended December 31, 2007, 2008 and 2009.(d)
    
    Share Redemptions and Reinstatement of Redeemed SharesOn January 22, 1999, pursuant to its Articles of Association, the Company redeemed
and canceled 415,500 shares of the Company registered in the name of Tele-Art Inc.
(Tele-Art) at a price of $3.73 per share for $1,549.On August 12, 2002, pursuant to its Articles of Association, the Company redeemed and
canceled an additional 509,181 shares of the Company beneficially owned by Tele-Art
at a price of $6.14 per share for $3,125.No shares have been redeemed since August 12, 2002.On November 20, 2006, judgment was rendered by the Lords of the Judicial Committee of
the Privy Council of the United Kingdom (the Privy Council), declaring that the
redemptions by the Company of its common shares beneficially owned by Tele-Art on
January 22, 1999 and August 12, 2002 were nullities and that the register of members
of the Company (i.e. the Companys shareholders register) should be rectified to
reinstate the redeemed shares together with any other shares which have since accrued
by way of exchange or dividend.Following the November 20, 2006 judgment, the Company received the order from the
Privy Council on January 9, 2007 to rectify the share register of Nam Tai by
registering such 1,017,149 (after adjustment of the 1 for 10 stock dividend on
November 7, 2003) shares (the Redeemed Shares) in the name of Bank of China (Hong
Kong) Limited (Bank of China). In March 2007, the Company issued the 1,017,149
common shares. However, as the court judgment was determined in 2006, the Company
accounted for the obligation to reinstate the Redeemed Shares at their fair value
(i.e. market closing price) on November 20, 2006, the date of the judgment.
 
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10.
    
    Earnings Per Share
 The calculations of basic earnings per share and diluted earnings per share are computed as
follows:
 Weightedaverage number
    
    Per shareYear ended December 31, 2007
    
    Income
    
    of shares
    
    amountBasic earnings per share
    
    $
    69,503
    
    
    
    44,583,585
    
    
    $
    1.56Effect of dilutive securities  Stock options
    
    
    
    
    
    
    963
    
    
    
    Effect of reinstatement of redeemed shares
    
    
    
    
    
    
    220,150
    
    
    
    Diluted earnings per share
    
    $
    69,503
    
    
    
    44,804,698
    
    
    $
    1.55
 220,000 options to purchase shares of common stock were excluded in the computation of 2007 diluted
earnings per
share as their effects were anti-dilutive.
 Weightedaverage number
    
    Per shareYear ended December 31, 2008
    
    Income
    
    of shares
    
    amountBasic earnings per share
    
    $
    30,635
    
    
    
    44,803,735
    
    
    $
    0.68Effect of dilutive securities  Stock options
    
    
    
    
    
    
    2,046
    
    
    
    Diluted earnings per share
    
    $
    30,635
    
    
    
    44,805,781
    
    
    $
    0.68
 15,000 options to purchase shares of common stock were excluded in the computation of 2008 diluted
earnings per
share as their effects were anti-dilutive.
 Weightedaverage number
    
    Per shareYear ended December 31, 2009
    
    Income
    
    of shares
    
    amountBasic earnings per share
    
    $
    1,652
    
    
    
    44,803,735
    
    
    $
    0.04Effect of dilutive securities  Stock options
    
    
    
    
    
    
    6,063
    
    
    
    Diluted earnings per share
    
    $
    1,652
    
    
    
    44,809,798
    
    
    $
    0.04
 11.
    
    Staff Retirement Plans
 The Company operates a retirement benefit scheme (RBS) for all qualifying employees in
Macao (terminated in March 2009) and a Mandatory Provident Fund (MPF) scheme for all
qualifying employees in Hong Kong. The RBS and MPF are defined contribution schemes and the
assets of the schemes are managed by  trustees independent to the Company.Both the RBS and MPF are available to all employees aged 18 to 64 and with at least 60 days
of service under the employment of the Company in Macao and Hong Kong. Contributions are
made by the Company at 5% based on the staffs relevant income. The maximum relevant income
for contribution purpose per employee is $3 per month. Staff members are entitled to 100%
of the Companys contributions together with accrued returns irrespective of their length of
service with the Company, but the benefit can be withdrawn by the employees in Macao at the
end of employment contracts while the benefits are required by law to be preserved until the
retirement age of 65 for employees in Hong Kong.According to the applicable laws and regulations in the PRC, the Company is required to
contribute 10% to 11% of the stipulated salary set by the local government of Shenzhen. The
principal obligation of the Company with respect to these retirement benefit schemes is to
make the required contributions under the scheme. No forfeited contributions may be used by
the employer to reduce the existing level of contributions.The cost of the Companys contribution to the staff retirement plans in Macao, Hong Kong
Japan and the PRC amounted to $1,800, $1,814 and $1,480 for the years ended December 31,
2007, 2008 and 2009, respectively.
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12.
    
    Income TaxesThe components of income before income taxes are as follows:
 Year ended December 31,
    
    2007
    
    2008
    
    2009PRC, excluding Hong Kong and Macao
    
    $
    78,318
    
    
    $
    3,055
    
    
    $
    4,629Hong Kong, Macao and other jurisdictions
    
    
    17,487
    
    
    
    35,891
    
    
    
    (3,881
    )$
    95,805
    
    
    $
    38,946
    
    
    $
    748
 The Companys income is not subject to taxation in BVI under the current BVI law. Subsidiaries operating in Hong Kong and
the PRC are subject to income taxes as described below, and the subsidiaries operating in Macao are exempted from income
taxes. Under the current Cayman Islands law, ZPTL, NTEEP and JIC Technology are not subject to profit tax in the Cayman
Islands as they have no business operations in the Cayman Islands. However, they may be subject to Hong Kong income taxes
as described below if they have income earned in or derived from Hong Kong, if applicable.The provision for current income taxes of the subsidiaries operating in Hong Kong has been calculated by applying the rate
of taxation of 17.5% for the year ended December 31, 2007 and 16.5% for the years ended December 31, 2008 and 2009 to the
estimated income earned in or derived from Hong Kong during the respective years if applicable.The basic corporate tax rate for Foreign Investment Enterprises (FIEs) in the PRC, such as NTSZ, Zastron Shenzhen, Namtek Shenzhen
and Jetup (collectively the Shenzhen PRC subsidiaries) was 33% (30% state tax and 3% local tax) as of December 31, 2007.
However, because all of these PRC subsidiaries are located in Shenzhen and are involved in production operations, they
qualified for a special reduced state tax rate of 15%. In addition, the local tax authorities in Shenzhen were not levying
any local tax as of December 31, 2007. In 2006, two new FIEs, Wuxi Zastron Tech and Wuxi Zastron Flex were established. They are
located in Wuxi, Jiangsu Province, the PRC and Wuxi Zastron Flex commenced production in 2009. They are entitled to an exemption
from the enterprise income tax in the PRC for two years commencing from 2008, following a 50% relief from enterprise income
tax in the PRC for the next three years.Pursuant to the old PRC Tax Law, for FIEs such as NTSZ, Zastron Shenzhen, Namtek Shenzhen and Jetup which export 70% or more of the
production value of their products, a reduction in the tax rate was available; in all cases apart from the years in which a
tax holiday and tax incentive is available, there is an overall minimum tax rate of 10%. The following details the tax
concessions received by the Companys Shenzhen PRC subsidiaries under the old PRC Tax Law:
 
    
    In 2007, NTSZ paid $9,145 and received a tax refund of $544 for being an
export-oriented enterprise for the year 2006, and $431 from reinvestment of profit for
the year 2005. In 2008, NTSZ received a tax refund of $2,045 from profit reinvestment
for 2005 and 2006, and $3,568 for being an export-oriented enterprise for year 2007.
    
    In 2007, Zastron Shenzhen paid $354 and received a tax refund of $191 and $494 from
reinvestment of profits for 2005 and 2006, respectively.
    
    In 2007, Namtek Shenzhen was entitled to a 5% tax refund for being an export-oriented
enterprise.
    
    In 2007, Jetup received a tax refund of $137 for being an export-oriented enterprise
for the year 2006. Besides, Jetup also received $98 and $258 from reinvestment of
profits for the years 2005 and 2006, respectively.
 In year 2006, a FIE whose foreign investor directly reinvests by way of capital injection its
share of profits obtained from that FIE or another FIE owned by the same foreign investor in
establishing or expanding an export-oriented or technologically advanced enterprise in the
PRC for a minimum period of five years may obtain a refund of the taxes already paid on those
profits. NTSZ, Zastron Shenzhen and Jetup qualified for such refunds of taxes as a result of
reinvesting their profit earned in previous years by their respective holding companies. As a
result, the Company recorded tax expense net of the benefit related to the refunds. At
December 31, 2007, tax recoverable under such arrangements was $5,365, which was included in
income taxes recoverable and received during 2008.On March 16, 2007, the PRC promulgated the New Law. Under the New Law which became effective
from January 1, 2008, inter alia, the tax refund under the capital reinvestment scheme as
described above is removed. As a result, for 2007, the Shenzhen PRC subsidiaries have
continued to provide enterprise income tax at a tax rate of 10% as discussed above. In
addition, under the New Law, all enterprises (both domestic enterprises and FIEs) will have
one uniform tax rate of 25%. On December 6, 2007, the State Council of the PRC issued
Implementation Regulations of the New Law. The New Law and Implementation Regulations have
changed the tax rate from 15% to 18%, 20%, 22%, 24% and 25% for years ended December 31, 2008
and 2009, and the years ending December 31, 2010, 2011 and 2012, respectively, for Shenzhen
PRC subsidiaries. In 2007, the deferred tax balance was adjusted to reflect the tax rates
that are expected to apply. Moreover, under the New Law, there is no reduction in the tax
rate for FIEs which export 70% or more of the production value of their products with effect
from January 1, 2008. As such, the Company does not have any further benefit for 2008 and
2009 after the implementation of the New Law.The Company, which has subsidiaries that are tax resident in the PRC, will be subject to the
PRC dividend withholding tax of 5% when and if undistributed earnings are declared to be paid
as dividends commencing on January 1, 2008 to the extent those dividends are paid out of
profits that arose on or after January 1, 2008.
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12.
    
    Income Taxes-continuedThe limitation of the Companys obligation for the 5% dividend withholding tax to only those
dividends paid out of earnings that arose on or after January 1, 2008 is due to guidance
issued by the PRC government in February 2008. As such, the Companys tax provision includes
$740 and $363 of income tax expense for the 5% dividend withholding tax on the balance of
distributable earnings that arose on or after January 1, 2008 within its PRC subsidiaries as
of December 31, 2008 and 2009 respectively.Uncertainties exist with respect to how the PRCs current income tax law applies to the
Companys overall operations, and more specifically, with regard to tax residency status. The
New Law includes a provision specifying that legal entities organized outside of the PRC will
be considered residents for PRC income tax purposes if their place of effective management or
control is within PRC. The Implementation Rules to the New Law provide that non-resident
legal entities will be considered PRC residents if substantial and overall management and
control over the manufacturing and business operations, personnel, accounting, properties,
etc. occurs within the PRC. Additional guidance is expected to be released by the PRC
government in the near future that may clarify how to apply this standard to taxpayers.
Despite the present uncertainties resulting from the limited PRC tax guidance on the issue,
the Company does not believe that its legal entities organized outside of the PRC should be
treated as residents for the New Laws purposes. If one or more of the Companys legal
entities organized outside of the PRC were characterized as PRC tax residents, the impact
would adversely affect the Companys results of operation.The Company has made its assessment of the level of tax authority for each tax position
(including the potential application of interest and penalties) based on the technical
merits, and has measured the unrecognized tax benefits associated with the tax positions.
Based on the evaluation by the Company, it is concluded that there are no significant
uncertain tax positions requiring recognition in the consolidated financial statements. The
Company classifies interest and/or penalties related to unrecognized tax benefits as a
component of income tax provisions; however, as of December 31, 2008 and 2009, there were no
interest and penalties related to uncertain tax positions, and the Company had no material
unrecognized tax benefit which would favorably affect the effective income tax rate in future
periods. The Company does not anticipate any significant increases or decreases to its
liability for unrecognized tax benefit within the next twelve months. Other than the audit
by the Hong Kong tax authorities as described below, the tax positions for the years 2007 to
2009 may be subject to examination by the PRC and Hong Kong tax authorities.Since the fourth quarter of 2007, various of our inactive subsidiaries have been involved in
tax disputes from year 1996 onwards with the Inland Revenue Department of Hong Kong, or
HKIRD, the income tax authority of the Hong Kong Government.In October 2007, the HKIRD issued an assessment Determination against NTTC, a limited
liability company incorporated in Hong Kong and an indirect wholly owned subsidiary of the
Company. This assessment relates to four tax years from 1996/1997 to 1999/2000. The taxes
assessed in this proceeding amount to approximately $2,900.After consulting Hong Kong tax experts, Nam Tai believed that the position of the HKIRD for
the years in question was incorrect as a matter of law and accordingly NTTC objected to the
HKIRDs assessment and appealed it to the Hong Kong Board of Review, an independent body
established under Hong Kong Inland Revenue Ordinance to hear appeals of HKIRD assessments. In
December 2008, the Board of Review dismissed the Companys appeal. According to advice from
Senior Counsel in Hong Kong, the Court of Appeal in Hong Kong is unlikely to disturb the
findings of the Board of Review. As such, NTTC has decided not to proceed with the appeal.In addition to the assessment Determination of October 2007, in May 2008, the HKIRD issued a
writ against NTTC claiming taxes in the amount of approximately $3,000 for the taxable years
from 1997/1998 to 2000/2001, partially overlapping the taxes against NTTC assessed by HKIRD
in its assessment Determination of October 2007. Nam Tais defence was then struck out by the
District Court in Hong Kong. According to advice from Senior Counsel in Hong Kong, the Court
of Appeal is unlikely to disturb the findings of the District Court. As such, NTTC has
decided not to appeal against the decision of the District Court.The HKIRD has also made estimated assessments against NTGM, another wholly owned subsidiary
of Nam Tai, which has been inactive since 2005. This assessment, which relates to the tax
years of 2001 and 2002, is in the amount of approximately $172, including interest allegedly
due thereon. On December 17, 2008, the Hong Kong tax authorities issued a Writ of Summons
through the District Court in Hong Kong claiming against NTGM for the amount of $172 as taxes allegedly due and payable, together with
interest, to the Hong Kong tax authorities for the fiscal years 2001 to 2002. NTGM filed its defense on January 29, 2009, but on February 17,
2009, HKIRD filed papers seeking to strike out the Defence. As the Defence of
NTGM was similar to the defense of NTTC and Senior Counsel has advised that the Defence of NTTC is
not arguable before the court, NTGM has accordingly agreed with HKIRD to allow Judgment to be
entered against NTGM by consent.HKIRD does not accept Nam Tais explanations that it was necessary for these subsidiaries to
perform their individual functions for the whole Nam Tai group and therefore the management
fees paid by the Company by contract to support and finance all the necessary overhead
expenses of these subsidiaries (not located in Hong Kong) to contribute to the businesses
representing the administration and finance departmental functions for the whole group under
the corporate structure at that time were not regarded as necessary expenses by HKIRD.
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12.
    
    Income Taxes-continuedSince it is believed that it will be difficult for these subsidiaries to continue
co-operating with HKIRD in the future, if the Company discontinues financing these
subsidiaries, they will be forced to liquidate in due course. As these subsidiaries do
not conduct any business and have been inactive or dormant for  some
time, and have
either assets of limited book-value  or no assets, it is believed that there should be no
impact from these proceeding  on the Companys financial
condition, liquidity or results of operations. Accordingly, no provision has been made regarding these assessments in Nam Tais consolidated
financial statements.The current and deferred components of the income tax expense appearing in the consolidated statements of income are as follows:
 Year ended December 31,
    
    2007
    
    2008
    
    2009Current tax
    
    $
    (7,276
    )
    
    $
    (3,670
    )
    
    $
    (2,087
    )Deferred tax
    
    
    3,246
    
    
    
    793
    
    
    
    804$
    (4,030
    )
    
    $
    (2,877
    )
    
    $
    (1,283
    )
 The Companys deferred tax assets and liabilities as of December 31, 2008 and 2009 are attributable to the following:
 December 31,
    
    2008
    
    2009Net operating losses
    
    $
    2,860
    
    
    $
    2,634Obsolete inventories
    
    
    199
    
    
    
    171Allowance for doubtful accounts
    
    
    5
    
    
    
    47Property, plant and equipment
    
    
    3,546
    
    
    
    4,486Employee severance benefits
    
    
    
    
    
    
    196Total deferred tax assets
    
    
    6,610
    
    
    
    7,534Less: valuation allowance
    
    
    (1,831
    )
    
    
    (1,588
    )Deferred tax assets
    
    
    4,779
    
    
    
    5,946Deferred tax liability arising from withholding tax on undistributed earnings
of PRC subsidiaries
    
    
    (740
    )
    
    
    (1,103
    )Net deferred tax
    
    $
    4,039
    
    
    $
    4,843
 Movement of valuation allowance:
 December 31,
    
    2007
    
    2008
    
    2009At beginning of the year
    
    $
    1,647
    
    
    $
    1,040
    
    
    $
    1,831Current year (reduction) addition
    
    
    (607
    )
    
    
    1,227
    
    
    
    (276
    )Disposal of a subsidiary
    
    
    
    
    
    
    (399
    )
    
    
    Change in tax law
    
    
    
    
    
    
    (37
    )
    
    
    33At end of the year
    
    $
    1,040
    
    
    $
    1,831
    
    
    $
    1,588
 The valuation allowance as of December 31, 2008 and 2009 was related to net operating losses
carried forward that, in the judgment of management, are more likely than not that the assets
will not be realized. In assessing the realizability of
deferred tax assets, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable income during the
periods in which those temporary differences become deductible.As of December 31, 2007, 2008 and 2009, the Company had net operating losses of $5,943,
$3,663 and $3,326, respectively, which may be carried forward indefinitely. As of December
31, 2009, the Company had net operating losses of $6,410 and $5,392, respectively, which will
expire in the year ending December 31, 2013 and 2014, respectively.A reconciliation of the income tax expense to the amount computed by applying the current tax
rate to the income before income taxes  in the consolidated
statements of income is as follows:
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12.
    
    Income Taxes  continued
 Year ended December 31,
    
    2007
    
    2008
    
    2009Income before income taxes
    
    $
    95,805
    
    
    $
    38,946
    
    
    $
    748PRC tax rate
    
    
    15
    %
    
    
    18
    %
    
    
    20
    %Income tax expense at PRC tax rate on income before income tax
    
    $
    (14,371
    )
    
    $
    (7,010
    )
    
    $
    (150
    )Effect of difference between Hong Kong and PRC tax rates applied to Hong Kong income
    
    
    132
    
    
    
    (71
    )
    
    
    (485
    )Effect of tax holidays and tax incentives
    
    
    3,902
    
    
    
    
    
    
    
    Effect of change in tax law
    
    
    3,246
    
    
    
    330
    
    
    
    364Change in valuation allowance
    
    
    607
    
    
    
    (1,227
    )
    
    
    276Deferred tax liability on withholding tax on undistributed profits of PRC subsidiaries
    
    
    
    
    
    
    (740
    )
    
    
    (363
    )Effect of income not taxable for tax purpose
    
    
    3,418
    
    
    
    7,307
    
    
    
    Tax benefit (expense) arising from items which are not assessable (deductible) for tax
purposes:Exempted interest income
    
    
    124
    
    
    
    57
    
    
    
    Exempted exchange gain
    
    
    984
    
    
    
    1,000
    
    
    
    Non-deductible legal and professional fees
    
    
    (332
    )
    
    
    (146
    )
    
    
    Non-deductible impairment loss on goodwill
    
    
    
    
    
    
    (3,122
    )
    
    
    Non-deductible and non-taxable items
    
    
    (672
    )
    
    
    655
    
    
    
    (766
    )Under-provision of income tax expense in prior years
    
    
    (877
    )
    
    
    
    
    
    
    (46
    )Others
    
    
    (191
    )
    
    
    90
    
    
    
    (113
    )$
    (4,030
    )
    
    $
    (2,877
    )
    
    $
    (1,283
    )
 No income tax arose in the United States of America in any of the periods presented.Additional tax that would otherwise have been payable without tax holidays and tax
concessions amounts to approximately $3,902, nil and nil in the years ended December 31,
2007, 2008 and 2009, respectively (representing a decrease in the basic earnings and diluted
earnings per share of $0.08, nil and nil in the years ended December 31, 2007, 2008 and 2009,
respectively).
 13.
    
    Entrusted loan receivable/payableDuring the year ended December 31, 2008, two of the PRC subsidiaries of the Company, NTSZ and
Jetup, entered into an entrusted loan arrangement in the amount of $8,199 with a bank, in
which NTSZ acts as the entrusting party, the bank acts as the lender and Jetup acts as the
borrower (the Entrusted Loan). The Entrusted Loan receivable and Entrusted Loan payable
cannot be offset
 and bear interest of 5% per annum and are repayable within one year. The
Entrusted Loan is used to finance the operation and working capitals needs of Jetup. The
entrusted loan was repaid in July 2009.
 14.
    
    Financial InstrumentsThe Companys financial instruments that are exposed to concentrations of credit risk consist
primarily of its cash and cash equivalents and accounts receivable.
As at December 31,   2009,
two major receivables  accounted for 35% and 13%    of total accounts receivable.The Companys cash and cash equivalents are deposits placed at banks with high credit
ratings. This investment policy limits the Companys exposure to concentrations of credit
risk.The accounts receivable balances largely represent amounts due from the Companys principal
customers who are generally international organizations with high credit ratings. Letters of
credit are the principal security obtained to support lines of credit or negotiated contracts
from a customer. As a consequence, concentrations of credit risk are limited. Allowance for
doubtful debts was $25 and $59 as of December 31, 2008 and 2009, respectively.
 15.
    
    Commitments and Contingencies
 (a)
    
    Commitments
 Our contractual obligations, including capital expenditure and future minimum lease payments
under non-cancelable operating lease arrangements as of December 31, 2009 are summarized
below. We do not participate in, or secure financing for, any unconsolidated limited purpose
entities.
 F-28




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##### Table of Contents



15.
    
    Commitments and Contingencies  continued
 (a)
    
    Commitments  continued
 Payments (in thousands) due by periodContractual Obligation
    
    Total
    
    
    2010
    
    
    2011
    
    
    2012Operating leases
    
    $
    3,999
    
    
    $
    1,797
    
    
    $
    1,582
    
    
    $
    620Capital commitment
    
    
    2,191
    
    
    
    2,191
    
    
    
    
    
    
    
    Total
    
    $
    6,190
    
    
    $
    3,988
    
    
    $
    1,582
    
    
    $
    620
 (b)
    
    Significant legal proceedings
 There is no significant legal proceeding as of December 31, 2009.
 16.
    
    Segment InformationThe Company operates in three segments: CECP, TCA and LCDP. The CECP segment is focused on
the manufacturing of products such as mobile phone accessories, entertainment devices,
educational products and optical devices. The TCA segment is focused on subassemblies and
components such as LCD modules for telecommunication products, radio frequency modules,
digital audio broadcast modules, FPC subassemblies, FPC board, and front light panels and
back light panels for handheld video game devices. The LCDP segment is focused on the
manufacturing of LCD panels and LCD modules for various electronic appliances. These segments
are operated and managed as strategic business units. The chief operating decision maker
evaluates the net income of each segment in assessing performance and allocating resources
between segments.The following table provides operating financial information for the three reportable
segments.
 Year ended December 31, 2007
 CECP
    
    TCA
    
    LCDP
    
    Corporate
    
    TotalNet sales  third parties
    
    $
    283,757
    
    
    $
    413,198
    
    
    $
    83,867
    
    
    $
    
    
    
    $
    780,822Cost of sales
    
    
    (234,729
    )
    
    
    (384,443
    )
    
    
    (74,632
    )
    
    
    
    
    
    
    (693,804
    )Gross profit
    
    
    49,028
    
    
    
    28,755
    
    
    
    9,235
    
    
    
    
    
    
    
    87,018General and administrative expenses *
    
    
    (12,422
    )
    
    
    (8,805
    )
    
    
    (4,640
    )
    
    
    (4,119
    )
    
    
    (29,986
    )Selling expenses *
    
    
    (2,847
    )
    
    
    (2,026
    )
    
    
    (1,691
    )
    
    
    
    
    
    
    (6,564
    )Research and development expenses
    
    
    (4,144
    )
    
    
    (3,941
    )
    
    
    (1,713
    )
    
    
    
    
    
    
    (9,798
    )Other income (expenses), net
    
    
    4,851
    
    
    
    561
    
    
    
    (121
    )
    
    
    (3,072
    )
    
    
    2,219Gain on disposal of marketable securities
    
    
    43,815
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    43,815Gain on sales of subsidiaries shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    390
    
    
    
    390Interest income
    
    
    3,609
    
    
    
    1,055
    
    
    
    30
    
    
    
    4,469
    
    
    
    9,163Interest expense
    
    
    (24
    )
    
    
    
    
    
    
    (452
    )
    
    
    24
    
    
    
    (452
    )Income (loss) before income taxes
    
    
    81,866
    
    
    
    15,599
    
    
    
    648
    
    
    
    (2,308
    )
    
    
    95,805Income taxes
    
    
    (5,655
    )
    
    
    350
    
    
    
    1,275
    
    
    
    
    
    
    
    (4,030
    )Consolidated net income (loss)
    
    
    76,211
    
    
    
    15,949
    
    
    
    1,923
    
    
    
    (2,308
    )
    
    
    91,775Net income attributable to noncontrolling interests
    
    
    (21,693
    )
    
    
    
    
    
    
    (458
    )
    
    
    (121
    )
    
    
    (22,272
    )Net income (loss) attributable to Nam Tai shareholders
    
    $
    54,518
    
    
    $
    15,949
    
    
    $
    1,465
    
    
    $
    (2,429
    )
    
    $
    69,503
 F-29




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##### Table of Contents



16.
    
    Segment Information-continued
 Year ended December 31, 2008
 CECP
    
    TCA
    
    LCDP
    
    Corporate
    
    TotalNet sales  third parties
    
    $
    271,365
    
    
    $
    274,953
    
    
    $
    76,534
    
    
    $
    
    
    
    $
    622,852Cost of sales
    
    
    (221,402
    )
    
    
    (259,345
    )
    
    
    (71,427
    )
    
    
    
    
    
    
    (552,174
    )Gross profit
    
    
    49,963
    
    
    
    15,608
    
    
    
    5,107
    
    
    
    
    
    
    
    70,678General and administrative expenses *
    
    
    (10,813
    )
    
    
    (9,450
    )
    
    
    (5,133
    )
    
    
    (3,716
    )
    
    
    (29,112
    )Selling expenses *
    
    
    (3,735
    )
    
    
    (1,534
    )
    
    
    (1,676
    )
    
    
    
    
    
    
    (6,945
    )Research and development expenses
    
    
    (5,496
    )
    
    
    (3,780
    )
    
    
    (1,614
    )
    
    
    
    
    
    
    (10,890
    )Impairment loss on goodwill
    
    
    
    
    
    
    
    
    
    
    (17,345
    )
    
    
    
    
    
    
    (17,345
    )Other income (expenses), net
    
    
    4,429
    
    
    
    821
    
    
    
    (155
    )
    
    
    1,333
    
    
    
    6,428Gain on sales of subsidiaries shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,206
    
    
    
    20,206Interest income
    
    
    2,801
    
    
    
    785
    
    
    
    179
    
    
    
    2,517
    
    
    
    6,282Interest expense
    
    
    
    
    
    
    
    
    
    
    (356
    )
    
    
    
    
    
    
    (356
    )Income (loss) before income taxes
    
    
    37,149
    
    
    
    2,450
    
    
    
    (20,993
    )
    
    
    20,340
    
    
    
    38,946Income taxes
    
    
    (4,278
    )
    
    
    1,221
    
    
    
    180
    
    
    
    
    
    
    
    (2,877
    )Consolidated net income (loss)
    
    
    32,871
    
    
    
    3,671
    
    
    
    (20,813
    )
    
    
    20,340
    
    
    
    36,069Net (income) loss attributable to noncontrolling interests
    
    
    (5,512
    )
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    (5,434
    )Net income (loss) attributable to Nam Tai shareholders
    
    $
    27,359
    
    
    $
    3,671
    
    
    $
    (20,735
    )
    
    $
    20,340
    
    
    $
    30,635
 Year ended December 31, 2009
 CECP
    
    TCA
    
    LCDP
    
    Corporate
    
    TotalNet sales  third parties
    
    $
    116,063
    
    
    $
    222,959
    
    
    $
    69,115
    
    
    $
    
    
    
    $
    408,137Cost of sales
    
    
    (94,806
    )
    
    
    (210,385
    )
    
    
    (62,626
    )
    
    
    
    
    
    
    (367,817
    )Gross profit
    
    
    21,257
    
    
    
    12,574
    
    
    
    6,489
    
    
    
    
    
    
    
    40,320General and administrative expenses
    
    
    (7,155
    )
    
    
    (12,775
    )
    
    
    (4,310
    )
    
    
    (4,153
    )
    
    
    (28,393
    )Selling expenses
    
    
    (2,018
    )
    
    
    (1,784
    )
    
    
    (1,464
    )
    
    
    
    
    
    
    (5,266
    )Research and development expenses
    
    
    (3,286
    )
    
    
    (2,152
    )
    
    
    (835
    )
    
    
    
    
    
    
    (6,273
    )Other income (expenses), net
    
    
    78
    
    
    
    213
    
    
    
    49
    
    
    
    (596
    )
    
    
    (256
    )Interest income
    
    
    476
    
    
    
    68
    
    
    
    10
    
    
    
    264
    
    
    
    818Interest expense
    
    
    
    
    
    
    
    
    
    
    (202
    )
    
    
    
    
    
    
    (202
    )Income (loss) before income taxes
    
    
    9,352
    
    
    
    (3,856
    )
    
    
    (263
    )
    
    
    (4,485
    )
    
    
    748Income taxes
    
    
    (2,683
    )
    
    
    743
    
    
    
    657
    
    
    
    
    
    
    
    (1,283
    )Consolidated net income (loss)
    
    
    6,669
    
    
    
    (3,113
    )
    
    
    394
    
    
    
    (4,485
    )
    
    
    (535
    )Net loss attributable to noncontrolling interests
    
    
    41
    
    
    
    969
    
    
    
    1,177
    
    
    
    
    
    
    
    2,187Net income (loss) attributable to Nam Tai shareholders
    
    $
    6,710
    
    
    $
    (2,144
    )
    
    $
    1,571
    
    
    $
    (4,485
    )
    
    $
    1,652
 
 *
    
    The 2009 presentation shows general and administrative expenses and selling expenses as
separate line items, whereas the Companys consolidated statements of income for 2007 and 2008, as
originally published, combined general and administrative expenses and selling expenses as a single
line item labeled Selling, general and administrative expenses. Selling, general and
administrative expenses for 2007 and 2008 have been presented separately in the segment information
to conform to the 2009 presentation.
 F-30




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##### Table of Contents



16.  Segment Information  continued
 Year ended December 31, 2007
 CECP
    
    TCA
    
    LCDP
    
    Corporate
    
    TotalDepreciation and amortization
    
    $
    6,815
    
    
    $
    10,453
    
    
    $
    4,230
    
    
    $
    3
    
    
    $
    21,501Capital expenditures
    
    $
    5,609
    
    
    $
    4,996
    
    
    $
    4,568
    
    
    $
    94
    
    
    $
    15,267Total assets
    
    $
    212,098
    
    
    $
    150,963
    
    
    $
    64,628
    
    
    $
    117,129
    
    
    $
    544,818
 Year ended December 31, 2008
 CECP
    
    TCA
    
    LCDP
    
    Corporate
    
    TotalDepreciation and amortization
    
    $
    6,846
    
    
    $
    10,558
    
    
    $
    4,800
    
    
    $
    4
    
    
    $
    22,208Capital expenditures
    
    $
    1,894
    
    
    $
    39,501
    
    
    $
    4,040
    
    
    $
    
    
    
    $
    45,435Total assets
    
    $
    189,889
    
    
    $
    164,516
    
    
    $
    42,977
    
    
    $
    116,679
    
    
    $
    514,061
 Year ended December 31, 2009
 CECP
    
    TCA
    
    LCDP
    
    Corporate
    
    TotalDepreciation and amortization
    
    $
    6,516
    
    
    $
    10,430
    
    
    $
    6,167
    
    
    $
    3
    
    
    $
    23,116Capital expenditure
    
    $
    176
    
    
    $
    24,335
    
    
    $
    471
    
    
    $
    
    
    
    $
    24,982Total assets
    
    $
    112,058
    
    
    $
    141,734
    
    
    $
    42,153
    
    
    $
    107,979
    
    
    $
    403,924
 There were no material inter-segment sales for the years ended December 31, 2007, 2008 and
2009.
 F-31




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##### Table of Contents



16.
    
    Segment Information  continued
 A summary sets forth the percentage of net sales of each of the Companys product lines of each segment for the
years ended December 31, 2007, 2008 and 2009, is as follows:
 Year ended December 31,
    
    2007
    
    
    2008
    
    
    2009Product lineCECP:- Assembling- Consumer electronics and communication products
    
    
    36
    %
    
    
    44
    %
    
    
    28
    %TCA
    
    
    53
    %
    
    
    44
    %
    
    
    55
    %LCDP:- Parts and components- LCD products
    
    
    11
    %
    
    
    12
    %
    
    
    17
    %100
    %
    
    
    100
    %
    
    
    100
    %
 A summary of net sales, net income (loss) attributable to Nam Tai shareholders and
long-lived assets by geographic areas is as follows:By geographical area:
 Year ended December 31,
    
    2007
    
    2008
    
    2009Net sales from operations within:- PRC, excluding Hong Kong and Macao:Unaffiliated customers
    
    $
    780,822
    
    
    $
    622,852
    
    
    $
    408,137Intercompany sales
    
    
    253
    
    
    
    141
    
    
    
    19781,075
    
    
    
    622,993
    
    
    
    408,156- Intercompany eliminations
    
    
    (253
    )
    
    
    (141
    )
    
    
    (19
    )Total net sales
    
    $
    780,822
    
    
    $
    622,852
    
    
    $
    408,137Net income (loss) attributable to Nam Tai shareholders within:- PRC, excluding Hong Kong and Macao
    
    $
    52,338
    
    
    $
    (4,542
    )
    
    $
    5,533- Hong Kong,
Macao
and other jurisdictions
    
    
    17,165
    
    
    
    35,177
    
    
    
    (3,881
    )Total net income attributable to Nam Tai shareholders
    
    $
    69,503
    
    
    $
    30,635
    
    
    $
    1,652
 Year ended December 31,
    
    2007
    
    2008
    
    2009Net sales to customers by geographical area:- Hong Kong
    
    $
    255,569
    
    
    $
    226,020
    
    
    $
    116,254- Europe
    
    
    128,800
    
    
    
    136,888
    
    
    
    47,577- United States
    
    
    113,352
    
    
    
    108,150
    
    
    
    41,147- PRC (excluding Hong Kong)
    
    
    169,395
    
    
    
    86,968
    
    
    
    43,300- Japan
    
    
    20,827
    
    
    
    11,623
    
    
    
    140,923- North America (excluding United States)
    
    
    11,328
    
    
    
    15,775
    
    
    
    762- Korea
    
    
    34,731
    
    
    
    9,411
    
    
    
    1,503- Other
    
    
    46,820
    
    
    
    28,017
    
    
    
    16,671Total net sales
    
    $
    780,822
    
    
    $
    622,852
    
    
    $
    408,137
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16.
    
    Segment Information  continued
 As of December 31,
    
    2007
    
    
    2008
    
    
    2009Long-lived assets by geographical area:- PRC, excluding Hong Kong and Macao
    
    $
    98,441
    
    
    $
    121,475
    
    
    $
    121,286- Hong Kong and Macao
    
    
    158
    
    
    
    185
    
    
    
    120Total long-lived assets
    
    $
    98,599
    
    
    $
    121,660
    
    
    $
    121,406
 Intercompany sales arise from the transfer of finished goods between subsidiaries operating
in different areas. These sales are generally at prices consistent with what the Company
would charge third parties for similar goods.The Companys sales to customers which accounted for 10% or more of its sales are as follows:
 Year ended December 31,
    
    2007
    
    
    2008
    
    
    2009A
    
    $
    157,891
    
    
    $
    95,508
    
    
    $
    72,922B
    
    
    123,858
    
    
    
    102,894
    
    
    
    94,015C
    
    
    84,555
    
    
    
    N/A
    
    
    
    N/AD
    
    
    N/A
    
    
    
    95,911
    
    
    
    41,559E
    
    
    N/A
    
    
    
    65,269
    
    
    
    N/AF
    
    
    N/A
    
    
    
    N/A
    
    
    
    49,770$
    366,304
    
    
    $
    359,582
    
    
    $
    258,266
 17.
    
    Employee severance benefits
 As a result of the global economic crisis, the Company suffered serious
difficulties in production and business operations during 2009, and reduced the headcount
in the operating subsidiaries by approximately 1,900 from 7,104 at December 31, 2008. The
employee severance benefits in 2009 amounted to $5,058 (2007 and 2008: nil), and it was
recorded as general and administrative expenses. The employee severance benefits by segment
were as follows:
 2009Expenses incurred by segment:CECP
    
    $
    1,698TCA
    
    
    2,101LCDP
    
    
    1,259$
    5,058
 2009Provision for employee severance benefits:Balance at January 1, 2009
    
    $
    Provision for the year
    
    
    5,058Payments
during the year
    
    
    (4,079
    )Balance at December 31, 2009
    
    $
    979
 18.
    
    Subsequent event
 The Company has applied to the Chinese government (i) to merge Jetup into Zastron Shenzhen and (ii) to merge Wuxi Zastron Tech into Wuxi
Zastron Flex. Upon completion of these mergers, which
the Company expects to be completed in the first half of 2010, Jetup and Wuxi Zastron Tech will cease
to exist, and their assets, liabilities and operations will be transferred to Zastron
Shenzhen and Wuxi Zastron Flex, respectively.
 F-33




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##### Table of Contents



SCHEDULE 1
NAM TAI ELECTRONICS, INC.
STATEMENTS OF INCOME
 (In thousands of US dollars)
 Year
ended December 31,2007
    
    
    2008
    
    
    2009General and administrative expenses*
    
    $
    (4,115
    )
    
    $
    (2,834
    )
    
    $
    (2,936
    )Other (expense) income, net
    
    
    (3,078
    )
    
    
    1,328
    
    
    
    (626
    )Gain on sales of subsidiaries shares
    
    
    390
    
    
    
    20,206
    
    
    
    Interest income on loan to a subsidiary
    
    
    
    
    
    
    12,146
    
    
    
    11,134Interest income
    
    
    4,493
    
    
    
    2,517
    
    
    
    263(Loss) income before income taxes
    
    
    (2,310
    )
    
    
    33,363
    
    
    
    7,835Income taxes
    
    
    
    
    
    
    
    
    
    
    (Loss)
income before share of net profits (losses) of  subsidiaries, net of taxes
    
    
    (2,310
    )
    
    
    33,363
    
    
    
    7,835Share of net profits (losses) of subsidiaries, net of taxes
    
    
    71,813
    
    
    
    (2,728
    )
    
    
    (6,183
    )Net income attributable to Nam Tai shareholders
    
    $
    69,503
    
    
    $
    30,635
    
    
    $
    1,652*  Amount of share-based compensation expense included in general and
administrative expenses
    
    $
    268
    
    
    $
    290
    
    
    $
    67
 F-34




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##### Table of Contents



SCHEDULE 1
 NAM TAI ELECTRONICS, INC.
 BALANCE SHEETS
 (In thousands of US dollars)
 December 31,2008
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    107,668
    
    
    $
    91,398Fixed deposits maturing over three months
    
    
    
    
    
    
    12,903Prepaid expenses and other receivables
    
    
    309
    
    
    
    Loan to a subsidiary  current
    
    
    51,906
    
    
    
    51,906Amounts due from subsidiaries
    
    
    12,990
    
    
    
    11,134Total current assets
    
    
    172,873
    
    
    
    167,341Equipments, net
    
    
    3
    
    
    
    1Loan to a subsidiary  non-current
    
    
    259,525
    
    
    
    233,573Investments in subsidiaries
    
    
    (96,928
    )
    
    
    (57,247
    )Total assets
    
    $
    335,473
    
    
    $
    343,668LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accrued expenses and other payables
    
    $
    3,355
    
    
    $
    2,576Dividend payable
    
    
    9,857
    
    
    
    Amounts due to subsidiaries
    
    
    
    
    
    
    14,682Total liabilities
    
    
    13,212
    
    
    
    17,258Shareholders equity:Common shares ($0.01 par value  authorized 200,000,000 shares,
issued 44,803,735 shares as at December 31, 2008 and 2009)
    
    
    448
    
    
    
    448Additional paid-in capital
    
    
    282,767
    
    
    
    285,264Retained earnings
    
    
    39,054
    
    
    
    40,706Accumulated other comprehensive loss
    
    
    (8
    )
    
    
    (8
    )Total shareholders equity
    
    
    322,261
    
    
    
    326,410Total liabilities and shareholders equity
    
    $
    335,473
    
    
    $
    343,668
 F-35




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##### Table of Contents



SCHEDULE 1
 NAM TAI ELECTRONICS, INC.
 STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
 (In thousands of US dollars, except share and per share data)
 AccumulatedCommon
    
    
    Common
    
    
    Reinstatement
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    TotalShares
    
    
    Shares
    
    
    of Redeemed
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Shareholders
    
    
    ComprehensiveOutstanding
    
    
    Amount
    
    
    Shares
    
    
    Captial
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Equity
    
    
    IncomeBalance at January 1, 2007
    
    
    43,786,586
    
    
    $
    438
    
    
    $
    17,159
    
    
    $
    264,393
    
    
    $
    25,030
    
    
    $
    10,074
    
    
    $
    317,094Equity-settled share-based payment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    268
    
    
    
    
    
    
    
    
    
    
    
    268Reinstatement of redeemed shares
    
    
    1,017,149
    
    
    
    10
    
    
    
    (17,159
    )
    
    
    17,149
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    69,503
    
    
    
    
    
    
    
    69,503
    
    
    $
    69,503Share of subsidiaries equity transactions:Equity settled share-based payment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85
    
    
    
    
    
    
    
    
    
    
    
    85Reserve shared by noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,052
    )
    
    
    
    
    
    
    (9,052
    )
    
    
    (9,052
    )Unrealized gain of marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,451
    
    
    
    17,451
    
    
    
    17,451Disposal of marketable securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,381
    )
    
    
    (27,381
    )
    
    
    (27,381
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (152
    )
    
    
    (152
    )
    
    
    (152
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    50,369Cash dividends ($0.84 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,635
    )
    
    
    
    
    
    
    (37,635
    )Balance at December 31, 2007
    
    
    44,803,735
    
    
    $
    448
    
    
    $
    
    
    
    $
    281,895
    
    
    $
    47,846
    
    
    $
    (8
    )
    
    $
    330,181Equity-settled share-based payment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    290
    
    
    
    
    
    
    
    
    
    
    
    290Repurchase of share options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (68
    )
    
    
    
    
    
    
    
    
    
    
    (68
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30,635
    
    
    
    
    
    
    
    30,635
    
    
    $
    30,635Share of subsidiaries equity transactions:Equity settled share-based payment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    650
    
    
    
    
    
    
    
    
    
    
    
    650Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    30,635Cash dividends ($0.88 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (39,427
    )
    
    
    
    
    
    
    (39,427
    )Balance at December 31, 2008
    
    
    44,803,735
    
    
    $
    448
    
    
    $
    
    
    
    $
    282,767
    
    
    $
    39,054
    
    
    $
    (8
    )
    
    $
    322,261Equity-settled share-based payment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    67Acquisition of subsidiaries share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,430
    
    
    
    
    
    
    
    
    
    
    
    2,430Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,652
    
    
    
    
    
    
    
    1,652
    
    
    $
    1,652Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,652Balance at December 31, 2009
    
    
    44,803,735
    
    
    $
    448
    
    
    $
    
    
    
    $
    285,264
    
    
    $
    40,706
    
    
    $
    (8
    )
    
    $
    326,410
 F-36




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##### Table of Contents



SCHEDULE 1
 NAM TAI ELECTRONICS, INC.
 STATEMENTS OF CASH FLOWS
 (In thousands of US dollars)
 Year ended December 31,2007
    
    
    2008
    
    
    2009Cash flows from operating activities:Net income attributable to Nam Tai shareholders
    
    $
    69,503
    
    
    $
    30,635
    
    
    $
    1,652Adjustments
to reconcile net income attributable to Nam Tai shareholders to net cash provided by operating activities:Share of net (profits) losses of subsidiaries, net of taxes
    
    
    (71,813
    )
    
    
    2,728
    
    
    
    6,183Dividend income from subsidiaries
    
    
    17,116
    
    
    
    26,446
    
    
    
    Gain on disposal of subsidiaries
    
    
    (390
    )
    
    
    (20,206
    )
    
    
    Depreciation
    
    
    1
    
    
    
    1
    
    
    
    2Dividend withheld
    
    
    
    
    
    
    (305
    )
    
    
    Share-based compensation expenses
    
    
    268
    
    
    
    290
    
    
    
    67Changes in current assets and liabilities:Decrease (increase) in prepaid expenses and other receivables
    
    
    978
    
    
    
    (298
    )
    
    
    309Increase (decrease) in accrued expenses and other payables
    
    
    613
    
    
    
    173
    
    
    
    (779
    )Net cash provided by operating activities
    
    $
    16,276
    
    
    $
    39,464
    
    
    $
    7,434Cash flows from investing activities:Proceeds on disposal of subsidiaries shares
    
    
    49,002
    
    
    
    50,024
    
    
    
    Increase in fixed deposits maturing over three months
    
    
    
    
    
    
    
    
    
    
    (12,903
    )Acquisition of subsidiaries shares
    
    
    (62,755
    )
    
    
    (2,906
    )
    
    
    (43,434
    )(Increase) decrease in amounts due from subsidiaries
    
    
    
    
    
    
    (12,946
    )
    
    
    1,856Purchase of equipment
    
    
    (3
    )
    
    
    
    
    
    
    (Increase) decrease in other assets
    
    
    (25
    )
    
    
    264
    
    
    
    Net cash (used in) provided by investing activities
    
    $
    (13,781
    )
    
    $
    34,436
    
    
    $
    (54,481
    )Cash flows from financing activities:(Decrease) increase in amounts due to subsidiaries
    
    
    (1,313
    )
    
    
    (1,439
    )
    
    
    14,682Proceeds from loan to a subsidiary
    
    
    
    
    
    
    
    
    
    
    25,952Payment for repurchase of share options
    
    
    
    
    
    
    (68
    )
    
    
    Dividend paid
    
    
    (44,765
    )
    
    
    (38,774
    )
    
    
    (9,857
    )Net cash (used in) provided by financing activities
    
    $
    (46,078
    )
    
    $
    (40,281
    )
    
    $
    30,777Net (decrease) increase in cash and cash equivalents
    
    
    (43,583
    )
    
    
    33,619
    
    
    
    (16,270
    )Cash and cash equivalents at beginning of year
    
    
    117,632
    
    
    
    74,049
    
    
    
    107,668Cash and cash equivalents at end of year
    
    $
    74,049
    
    
    $
    107,668
    
    
    $
    91,398
 F-37




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##### Table of Contents



SCHEDULE 1
 NAM TAI ELECTRONICS, INC.
 NOTE TO SCHEDULE 1
 (in thousands of US dollars)
   F-38




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##### Table of Contents



ITEM 19. EXHIBITS
  Exhibit No.
    
    Exhibit1.1
    
    Memorandum and Articles of Association, as amended on June 26, 2003 (incorporated by reference to Exhibit
1.1 to the registrants Form 8-A/A filed with the SEC on December 13, 2007).4.1
    
    2006 Stock Option Plan of Nam Tai Electronics, Inc adopted February 10, 2006 and approved on June 9, 2006
(incorporated by reference to Exhibit A attached to Exhibit 99.1 of the Form 6-K furnished to the SEC on May
15, 2006).4.2
    
    Amendment to 2006 Stock Option Plan (incorporated by reference to Exhibit 4.1.1 to the Companys
Registration Statement on Form S-8 File No. 333-136653 included with the Company Form 6-K furnished to the
SEC on November 13, 2006).4.3
    
    Amended 2001 Option Plan dated July 30, 2004 (incorporated by reference to Exhibit 4.18 to the Companys
Form 20-F for the year ended December 31, 2004 filed with the SEC on March 15, 2005).4.4
    
    Amendment to 2001 Stock Option Plan (incorporated by reference to Exhibit 4.1.1 to the Companys
Registration Statement. on Form S-8 File No. File No. 333-76940 included with Companys Form 6-K furnished to
the SEC on November 13, 2006).4.5
    
    Agreement dated March 28, 2008 between Nam Tai subsidiary, Wuxi Zastron Precision-Flex Co. Ltd. (formerly
known as Zastron Precision-Flex (Wuxi) Co. Ltd.) and Yixing Building Engineering & Installation Co. Ltd. for
the engagement of Yixing Building Engineering & Installation Co. Ltd. as the main contractor of civil works
in relation to the facility in Wuxi (incorporated by reference to Exhibit 4.52 to the Companys Form 20-F
for the year ended December 31, 2008 filed with the SEC on March 13, 2009)*4.6
    
    Supplemental Loan Agreement dated April 3, 2008 between Nam Tais two subsidiaries, Zastron Precision Tech
Limited and Zastron Electronic (Shenzhen) Co. Ltd extending the repayment term for a loan of $18,660,000
granted from Zastron Precision-Tech Limited to Zastron Electronic (Shenzhen) Co. Ltd. (incorporated by
reference to Exhibit 4.53 to the Companys Form 20-F for the year ended December 31, 2008 filed with the SEC
on March 13, 2009)4.7
    
    Banking Facilities Letter dated June 2, 2008 to Nam Tais subsidiary, Nam Tai Electronic & Electrical
Products Limited from Hongkong and Shanghai Banking Corporation Limited (incorporated by reference to
Exhibit 4.54 to the Companys Form 20-F for the year ended December 31, 2008 filed with the SEC on March 13,
2009).4.8
    
    Banking Facilities Letter dated July 7, 2008 to Nam Tais subsidiary, Zastron Electronic (Shenzhen) Co. Ltd.
from HSBC Bank (China) Company Limited (incorporated by reference to Exhibit 4.55 to the Companys Form 20-F
for the year ended December 31, 2008 filed with the SEC on March 13, 2009).4.9
    
    Guarantee dated July 7, 2008 from Nam Tais subsidiary, Namtai Electronic and Electrical Products Limited to
HSBC Bank (China) Company Limited (incorporated by reference to Exhibit 4.56 to the Companys Form 20-F for
the year ended December 31, 2008 filed with the SEC on March 13, 2009).4.10
    
    Supplemental Agreement dated July 10, 2008 between Nam Tai subsidiary, Wuxi Zastron Precision-Flex Co. Ltd.
(formerly known as Zastron Precision-Flex (Wuxi) Co. Ltd.) and Yixing Building Engineering & Installation
Co. Ltd. for the engagement of Yixing Building Engineering & Installation Co. Ltd. as the main contractor of
mechanical and electrical works in relation to the facility in Wuxi (incorporated by reference to Exhibit
4.57 to the Companys Form 20-F for the year ended December 31, 2008 filed with the SEC on March 13, 2009).4.11
    
    Novation Agreement dated August 8, 2008 between Nam Tais two subsidiaries, Nam Tai Electronic & Electrical
Products Limited and Zastron Precision-Tech Limited, on the one hand, and Parsons Brinckerhoff (Asia)
Limited, on the other (incorporated by reference to Exhibit 4.58 to the Companys Form 20-F for the year
ended December 31, 2008 filed with the SEC on March 13, 2009).4.12
    
    Banking Facilities Letter dated August 11, 2008 to Nam Tais subsidiary, Namtai Electronic (Shenzhen) Co.
Ltd. from HSBC Bank (China) Company Limited for Namtai Electronic (Shenzhen) Co., Ltd. (incorporated by
reference to Exhibit 4.59 to the Companys Form 20-F for the year ended December 31, 2008 filed with the SEC
on March 13, 2009).4.13
    
    Banking Facilities Letter dated August 11, 2008 to Nam Tais subsidiary, Jetup Electronic (Shenzhen) Co.
Ltd. from HSBC Bank (China) Company Limited (incorporated by reference to Exhibit 4.60 to the Companys Form
20-F for the year ended December 31, 2008 filed with the SEC on March 13, 2009).4.14
    
    Novation Agreement dated August 13, 2008 between Nam Tais two subsidiaries, Nam Tai Electronic & Electrical
Products Limited and Zastron Precision-Tech Limited and SAP HK Co. Ltd (incorporated by reference to Exhibit
4.61 to the Companys Form 20-F for the year ended December 31, 2008 filed with the SEC on March 13, 2009).
 78




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##### Table of Contents



Exhibit No.
    
    Exhibit4.15
    
    Novation Agreement dated August 13, 2008, Nam Tai Electronic & Electrical Products Limited and Zastron
Precision-Tech Limited and Hong Kong Productivity Council (incorporated by reference to Exhibit 4.62 to the
Companys Form 20-F for the year ended December 31, 2008 filed with the SEC on March 13, 2009).4.16
    
    Banking Facilities Letter dated November 24, 2008 from and China Construction Bank to Nam Tais subsidiary,
Namtai Electronic (Shenzhen) Co. Ltd., (incorporated by reference to Exhibit 4.63 to the Companys Form 20-F
for the year ended December 31, 2008 filed with the SEC on March 13, 2009).**4.17
    
    Supplemental plant construction contractors agreement (electrical engineering) dated July 10, 2009 between
Nam Tai Subsidiary, Wuxi Zastron Precision-Flex Company Limited, and Yixing Building Engineering &
Installation Co. Ltd.**4.18
    
    Banking Facilities Letter dated August 6, 2009, between Nam Tais subsidiary, Namtai Electronic (Shenzhen)
Company Ltd and HSBC Bank (China) Company (renewing the Bank
Facilities letter included as Exhibit 4.12
above).8.1
    
    Diagram of Companys subsidiaries at December 31, 2009. See the diagram on page 22 of this Report.11.1
    
    Code of Ethics (incorporated by reference to Exhibit 14.1 to the Companys Form 20-F for the year ended
December 31, 2004 filed with the SEC on March 15, 2005)12.1
    
    Certification pursuant to Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.12.2
    
    Certification pursuant to Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.13.1
    
    Certification pursuant to Rule 13 a
- 14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.15.1
    
    Consent of Independent Registered
Public Accounting Firm - Morre Stephens.15.2
    
    Consent of Independent Registered
Public Accounting Firm - Deloitte Touche Tohmatsu15.3
    
    Letter of Deloitte Touche Tohmatsu, registrants former independent registered public accounting firm, dated
April 20, 2009 filed pursuant to Item 16F(a)(3) of Form 20-F (incorporated by reference to Exhibit 2 of the
Companys Form 6-K for the month of April 2009 furnished to the SEC on April 20, 2009).
 
 *
    
    The agreement is written in Chinese and a Summary is provided in accordance with Form 20-F
Instructions to Exhibits and Rule 12b-12(d) under the Exchange Act).**
    
    The agreement is written in Chinese and an English Translation is provided in accordance with
Form 20-F Instructions to Exhibits and Rule 12b-12(d) under the Exchange Act). 79




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##### Table of Contents



SIGNATURE
  NAM TAI ELECTRONICS, INC.By:

/s/
Koo Ming KownKoo Ming KownChief Financial Officer  80