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OMB APPROVALOMB Number: 3235-0288Expires: December 31, 2012Estimated average burden hours per response...2645.00
    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
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                     to                    ;
 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
 (NAM TAI ELECTRONICS LOGO)
Nam Tai Electronics, Inc.
  Kee Wong, Corporate SecretaryGushu Industrial Estate,
    
    Tele: (852) 2341 0273; Fax
(852) 2263
1001(1);Xixiang,
    
    E-mail: lkwong@namtai.com.hkBaoan, Shenzhen,
    
    Unit 1201, 12th Floor, Tower 1, Lippo Centre,British Virgin Islands
    
    Peoples Republic of China
    
    89 Queensway, Admiralty, Hong Kong(1)(Jurisdiction of incorporation or organization)
    
    (Address of principal executive offices)
    
    (Name, Telephone, E-mail and/or Facsimile numberand Address of Company Contact Person)
     o þ
 o þ
  þ o
 þ (2) o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
  þ o o
 o o
 o þ
 
 (1)
    
    Fax and address effective April 1, 2011. Until
April 1, 2011, registrants address is Units 5811-12,
58/F, The Center, 99 Queens Road Central, Central, Hong Kong
and its fax number is (852) 2263 1223(2)
    
    Interactive data filings are not required of registrant until its Annual Report on Form 20-F
for its year ending December 31, 2011.




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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
    
    
    21Item 4a. Unresolved Staff Comments
    
    
    36Item 5. Operating and Financial Review and Prospects
    
    
    36Item 6. Directors and Senior Management
    
    
    49Item 7. Major Shareholders and Related Party Transactions
    
    
    57Item 8. Financial Information
    
    
    59Item 9. The Listing
    
    
    61Item 10. Additional Information
    
    
    62Item 11. Quantitative and Qualitative Disclosures About Market Risk
    
    
    69Item 12. Description of Securities Other Than Equity Securities
    
    
    71PART II
    
    
    72Item 13. Defaults, Dividend Arrearages and Delinquencies
    
    
    72Item 14. Material Modifications To the Rights of Security Holders and Use of Proceeds
    
    
    72Item 15. Controls and Procedures
    
    
    72Attestation Report of Independent Registered Public Accounting Firm
    
    
    72Report
of Independent Registered Public Accounting Firm
    
    
    73Item 16. [Reserved]
    
    
    74Item 16 A. Audit Committee Financial Expert
    
    
    74Item 16 B. Code of Ethics
    
    
    74Item 16 C. Principal Accountant Fees and Services
    
    
    74Item 16 D. Exemptions From the Listing Standards For Audit Committees
    
    
    75Item 16 E. Purchases of Equity Securities By the Issuer and Affiliated Purchasers
    
    
    75Item 16 F. Change In Registrants Certifying Accountant
    
    
    75Item 16 G. Corporate Governance
    
    
    75PART III
    
    
    76Item 17. Financial Statements
    
    
    76Item 18. Financial Statements
    
    
    76Index To Consolidated Financial Statements
    
    
    76Report 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 Nam Tai Electronics, Inc. Statements of Income
    
    
    F-30Schedule 1 Nam Tai Electronics, Inc. Balance Sheets
    
    
    F-31Schedule 1 Nam Tai Electronics, Inc. Statements of Changes In Shareholders Equity and Comprehensive Income
    
    
    F-32Schedule 1 Nam Tai Electronics, Inc. Statements of Cash Flows
    
    
    F-33Schedule 1 Nam Tai Electronics, Inc. Note to Schedule 1
    
    
    F-34Item 19. Exhibits
    
    
    77Signature
    
    
    79Certification required by Rule 13a-14(a) and 18 U.S.C. Section 1350
    
    Exhibit 12.1Certification required by Rule 13a-14(a) and 18 U.S.C. Section 1350
    
    Exhibit 12.2Certification Pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350
    
    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-4.8EX-4.10EX-4.11EX-4.12EX-4.13EX-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,Consolidated statements of income data:
    
    2006
    
    2007
    
    2008
    
    2009
    
    2010(in thousands, except per share data)Net sales
    
    $
    870,174
    
    
    $
    780,822
    
    
    $
    622,852
    
    
    $
    408,137
    
    
    $
    534,420Cost of sales
    
    
    (783,953
    )
    
    
    (693,804
    )
    
    
    (552,174
    )
    
    
    (367,817
    )
    
    
    (483,126
    )Gross profit
    
    
    86,221
    
    
    
    87,018
    
    
    
    70,678
    
    
    
    40,320
    
    
    
    51,294Gain on disposal of asset held for sale
    
    
    9,258
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating expenses:General and administrative expenses (1)(2)
    
    
    (26,203
    )
    
    
    (29,986
    )
    
    
    (29,112
    )
    
    
    (28,393
    )
    
    
    (25,232
    )Selling expenses (1)
    
    
    (4,465
    )
    
    
    (6,564
    )
    
    
    (6,945
    )
    
    
    (5,266
    )
    
    
    (5,504
    )Research and development expenses
    
    
    (7,866
    )
    
    
    (9,798
    )
    
    
    (10,890
    )
    
    
    (6,273
    )
    
    
    (5,757
    )Impairment loss on goodwill
    
    
    
    
    
    
    
    
    
    
    (17,345
    )
    
    
    
    
    
    
    Losses arising from the judgment to reinstate redeemed shares
    
    
    (14,465
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    (52,999
    )
    
    
    (46,348
    )
    
    
    (64,292
    )
    
    
    (39,932
    )
    
    
    (36,493
    )Income from operations
    
    
    42,480
    
    
    
    40,670
    
    
    
    6,386
    
    
    
    388
    
    
    
    14,801Other (expenses) income  net
    
    
    (1,265
    )
    
    
    2,219
    
    
    
    6,428
    
    
    
    (256
    )
    
    
    3,972Gain on sale of subsidiaries shares
    
    
    
    
    
    
    390
    
    
    
    20,206
    
    
    
    
    
    
    
    Gain on disposal of marketable securities
    
    
    
    
    
    
    43,815
    
    
    
    
    
    
    
    
    
    
    
    Loss on marketable securities arising from split share
structure reform
    
    
    (1,869
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest income
    
    
    8,542
    
    
    
    9,163
    
    
    
    6,282
    
    
    
    818
    
    
    
    1,484Interest expense
    
    
    (602
    )
    
    
    (452
    )
    
    
    (356
    )
    
    
    (202
    )
    
    
    Income before income tax
    
    
    47,286
    
    
    
    95,805
    
    
    
    38,946
    
    
    
    748
    
    
    
    20,257Income tax expenses(3)
    
    
    (377
    )
    
    
    (4,030
    )
    
    
    (2,877
    )
    
    
    (1,283
    )
    
    
    (5,251
    )Consolidated net income (loss)
    
    
    46,909
    
    
    
    91,775
    
    
    
    36,069
    
    
    
    (535
    )
    
    
    15,006Net (income) loss attributable to noncontrolling interests
    
    
    (6,153
    )
    
    
    (22,272
    )
    
    
    (5,434
    )
    
    
    2,187
    
    
    
    Net income attributable to Nam Tai shareholders
    
    
    40,756
    
    
    
    69,503
    
    
    
    30,635
    
    
    
    1,652
    
    
    
    15,006Earnings per share:Basic
    
    $
    0.93
    
    
    $
    1.56
    
    
    $
    0.68
    
    
    $
    0.04
    
    
    $
    0.33Diluted
    
    $
    0.93
    
    
    $
    1.55
    
    
    $
    0.68
    
    
    $
    0.04
    
    
    $
    0.33
 Consolidated balance sheet data:
    
    2006
    
    2007
    
    2008
    
    2009
    
    2010(in thousands, except per share data)Cash and cash equivalents
    
    $
    221,084
    
    
    $
    272,459
    
    
    $
    237,017
    
    
    $
    182,722
    
    
    $
    228,067Fixed deposits maturing over three months
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,903
    
    
    
    Working capital(4)
    
    
    238,105
    
    
    
    266,306
    
    
    
    239,037
    
    
    
    197,718
    
    
    
    222,234Land use rights and property, plant and equipment, net
    
    
    105,394
    
    
    
    98,599
    
    
    
    121,660
    
    
    
    121,406
    
    
    
    101,159Total assets
    
    
    529,235
    
    
    
    544,818
    
    
    
    514,061
    
    
    
    403,924
    
    
    
    450,780Short-term debt, including current portion of long-term debt
    
    
    6,266
    
    
    
    6,570
    
    
    
    8,199
    
    
    
    
    
    
    
    Long-term debt, less current portion
    
    
    1,100
    
    
    
    1,558
    
    
    
    
    
    
    
    
    
    
    
    Total debt
    
    
    7,366
    
    
    
    8,128
    
    
    
    8,199
    
    
    
    
    
    
    
    Total Nam Tai shareholders equity (5)
    
    
    317,094
    
    
    
    330,181
    
    
    
    322,261
    
    
    
    326,410
    
    
    
    334,134Common shares
    
    
    438
    
    
    
    448
    
    
    
    448
    
    
    
    448
    
    
    
    448Total dividend per share(6)
    
    
    1.52
    
    
    
    0.84
    
    
    
    0.88
    
    
    
    
    
    
    
    0.20Total number of common shares issued
    
    
    43,787
    
    
    
    44,804
    
    
    
    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
items 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 and 2010
presentation.(2)
    
    General and administrative expenses for the years ended December 31, 2009 and 2010 included
employee severance benefits of $5.1 million and $656,000, respectively. General and
administrative expenses for the years ended December 31, 2009 and 2010 also included accruals
of $833,333 and $750,000, respectively, for a compensation obligation payable to the Companys
CFO at the end of three years continuous service. In October 2010, the Companys compensation
obligation payable at the end of three years to its CFO was terminated. In accordance with
Staff Accounting Bulletin (SAB) Topics 1B.1 and 5T, Financial Accounting Standard Board
(FASB) Accounting Standards Codification (ASC) 718-10-15-4, the aggregate of approximately
$1.6 million previously accrued on this obligation during the periods from March 1, 2009
through December 31, 2009 and from January 1, 2010 to September 30, 2010 was reclassified and
added to additional paid-in capital on the Companys Balance Sheet as at December 31, 2010.(3)
    
    Income tax expenses for the year ended December 31, 2010 included a deferred tax credit of
$2.6 million arising from tax losses of the Companys flexible printed circuit, or FPC,
business in Wuxi. However, the actual utilization of such deferred tax asset depends on future
profit streams of that business.(4)
    
    Working Capital represents the excess of current assets over current liabilities.(5)
    
    In November 2009, Nam Tai successfully completed the privatization of Nam Tai Electronic &
Electrical Products Limited, or NTEEP, by tendering for and acquiring the 25.12 percent of
NTEEP that it did not previously own, i.e., NTEEPs noncontrolling shares, resulting in NTEEP
becoming the Companys wholly-owned subsidiary. Beginning with its consolidated financial
statements for the year ended December 31, 2009, Nam Tai reclassified noncontrolling interests
for years prior to 2009 as equity in accordance with FASB ASC 810-10-45-16
Consolidated-Overall-Other Presentation Matter  Noncontrolling Interest in a Subsidiary.
The presentation in the table above includes such reclassification for 2006, 2007 and 2008.
Total Nam Tai shareholders equity at December 31, 2010 also included approximately $1.6
million previously accrued on a compensation obligation payable to the Companys CFO, which
was terminated in October 2010. See footnote (2) above.(6)
    
    For 2010, the Company declared a dividend payable quarterly in 2011. See the table entitled
Dividends declared for 2011 in Item 8 Financial Information  Dividends on page 61 of this
Report for the schedule of dividend payments for 2011. 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.
   Continuing economic weakness may adversely affect our earnings, liquidity and financial position.
   
    
    the demand for our customers products,
    
    the amount, timing and stability of their orders to us,
    
    the financial strength of our customers and suppliers,
    
    our customers and suppliers 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.
  5




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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.
   We face increasing competition, which has had and may continue to have, an adverse effect on our
gross margins.
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Consolidation in industries that utilize or manufacture electronics components may adversely affect
our business.
   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.
  7




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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 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.Liquid crystal display, or LCD panels
    
    
    
    Tianma Microelectronics Co., Ltd
    
    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 LimitedInventec Co. Ltd.
    
    Kinpo Electronics, Inc.
    
    VTech Holdings LimitedFPC boards/FPC subassemblies
    
    
    
    Ichia Technologies Inc.
    
    Nitto Denko (HK) Ltd.
    
    NOK Corporation
   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 changes and short
life cycles for their products, which may materially adversely affect their business, and also
ours.
  
    
    The inability of our customers to adapt to rapidly changing technology and
evolving industry standards, which result in short product life cycles.
    
    The inability of our customers to develop and market their products, some of
which are new and untested, the potential that our customers products may become
obsolete or the failure of our customers products to gain widespread commercial
acceptance.
    
    Recessionary periods in our customers markets.
    
    Increased competition among our customers and their respective competitors which
may result in a loss of business, or a reduction in pricing power, for our customers.
    
    New product offerings by our customers competitors may prove to be more
successful than our customers product offerings.
  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.
 9




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Our business is capital intensive and the failure to generate sufficient cash could require that we
curtail capital expenditures.
  Our inability to obtain local government approvals to release or obtain lands needed for our
planned expansion projects would limit our future manufacturing capacity and adversely impact our
growth and potentially our financial results when our existing capacity is reached.
  
    
    the development of raw land in the Guangming Hi-Tech Industrial Park Shenzhen,
China that we acquired in 2007 into new manufacturing and support facilities to
supplement manufacturing that we conduct at our principal manufacturing facilities in
Shenzhen, China, and
    
    the acquisition and development of raw land adjacent to our recently operational
manufacturing facility in Wuxi, China in order to construct structures, such as
dormitories, canteen, labor activity center, research laboratory and testing and
training centers, to support operations at our Wuxi manufacturing facility.
    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.
  10




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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.
   The economy of China has been experiencing significant growth, leading to inflation and increased
labor costs. Any material increases in the labor costs for workers in the PRC may have a material
and adverse effect on our financial operating results and profitability.
   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.
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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 fluctuations, collection difficulties or other country-specific losses;
    
    exposure to fluctuations in the value of local currencies;
    
    changes in value-added tax reimbursement;
    
    imposition of currency exchange controls; and
    
    delays from customs brokers or government agencies.
  Our operating results could be negatively impacted by seasonality.
   Our results could be adversely affected with intensifying environmental regulations.
  i.e.
 12




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Power shortages in China could affect our business.
  Our insurance coverage may not be sufficient to cover the risks to our manufacturing facilities or
related to our operations.
   We could become involved in intellectual property disputes.
  We depend on our executive officers and skilled personnel and if we are unable to attract or retain
personnel necessary to operate our business, our ability to perform our services and manufacture
and market our products successfully could be harmed.
  13




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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.
  Changes to PRC tax laws and heightened efforts by the Chinas tax authorities to increase revenues
have subjected us to greater taxes.
  We appear to have been a passive foreign investment company for 2010 and based on our current
operations and market conditions, we may be a passive foreign investment company for 2011, which
could result in adverse U.S. federal income tax consequences to some U.S. investors.
  14




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##### Table of Contents



Changes in foreign exchange regulations of China could adversely affect our operating results.
  Changes in currency exchange rates involving the Japanese yen or RMB have and could continue to
significantly affect our financial results.
  
 Our operating costs and financial results have been adversely affected by the appreciation of RMB
to the US dollar. A future appreciation of the Japanese yen against the U.S. dollar would increase
our costs and could adversely affect our margins and financial results unless we made sufficient
sales in Japanese yen to offset against costs and expenses, including material purchases, we make
in Japanese yen.
  15




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##### Table of Contents



(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 year fell on a Saturday or Sunday, datum is provided as of the previous
Friday.   RMB Exchange Rate to US$1.00 at December 31(1)2008
    
    2009
    
    2010Exchange Rate
    
    Percent
    
    Exchange Rate
    
    Percent
    
    Exchange Rate
    
    Percentto US$1.00
    
    change(2)
    
    to US$1.00
    
    change(2)
    
    to US$1.00
    
    change(2)6.823
    
    6.59%
    
    6.827
    
    -0.06%
    
    6.602
    
    3.30%
 
 (1)
    
    RMB to US dollar data presented in this table were derived from the historical
currency converter available at http://forex-history.net.(2)
    
    From exchange rate at preceding December 31.   16




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##### Table of Contents



Yen Exchange Rate to US$1.00 at December 31(1)2008
    
    
    2009
    
    
   2010Exchange Rate
    
    Percent
    
    
    Exchange Rate
    
    
    Percent
    
    
    Exchange Rate
    
    
    Percentto US$1.00
    
    change(2)
    
    
    to US$1.00
    
    
    change(2)
    
    
    to US$1.00
    
    
    change(2)90.637
    
    
    19.10%
    
    
    
    92.434
    
    
    
    -1.98%
    
    
    
    81.313
    
    
    
    12.03%
 
 1)
    
    Yen to US dollar data presented in this table were derived from the historical currency
converter available at http://forex-history.net.2)
    
    From exchange rate at preceding December 31.    We are exposed to intangible asset risk.
  Nam Tais declaration and payment of dividends is not assured. We declared no dividends for 2009
and 2010. Although our Board has resumed dividends for 2011, we may not declare or pay dividends
thereafter.
 
 17




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##### Table of Contents



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.
   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.
  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.
  18




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##### Table of Contents



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.
   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);
 19




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##### Table of Contents




    
    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;
    
    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).
   20




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##### Table of Contents



ITEM 4.
    
    INFORMATION ON THE COMPANY
 Corporate Information
  Major Events during 2010 to Date
  
    
    We began production of FPC boards and FPC subassemblies at our Wuxi factory that
we completed in 2009. During all of 2010, our Wuxi operations focused on developing
manufacturing processes, on evaluations and qualifications by our customers and on
resources planning in preparation for ramping up manufacturing at these facilities
during 2011.
    
    We merged our wholly-owned dormant subsidiary, Wuxi Zastron Precision Tech Co.
Ltd., into our wholly owned subsidiary, Wuxi Zastron Precision Flex Co. Ltd., which is
now conducting all of our manufacturing of FPC boards and FPC subassemblies in Wuxi.
    
    To simplify our organization and structure further, and in view of the similarity
of our Shenzhen operations and the products we manufacture there, we have consolidated
the operations and businesses of the three reporting units into a single wholly-owned
subsidiary:
 o
    
    First merging our wholly-owned subsidiary, Jetup Electronic
(Shenzhen) Co. Ltd. with and into Zastron Electronic (Shenzhen) Co. Ltd.
(Zastron Shenzhen) in April 2010; ando
    
    Then transferring the businesses and operations of our wholly owned
subsidiary, Namtai Electronic (Shenzhen) Co. Ltd. (Namtai Shenzhen) to Zastron
Shenzhen in October 2010.
  Organizational Structure
  21




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22




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Nam Tai Electronic & Electrical Products Limited, or NTEEP, was
incorporated in June 2003 and is a holding company for the subsidiaries shown
in the chart above and discussed below. Shares of NTEEP were listed on the Hong
Kong Stock Exchange from April 28, 2004 until November 12, 2009, when Nam Tai
completed the privatization of NTEEP by tendering for, and acquiring, the 25.12
percent of NTEEP that Nam Tai did not previously own. At December 31, 2009 and
2010, NTEEP was a wholly-owned subsidiary of Nam Tai Electronics,
Inc.100%
    
    
    
    100%Namtai Electronic (Shenzhen)
Co., Ltd. (Namtai Shenzhen) was
originally established as Baoan (Nam
Tai) Electronic Co. Ltd. in June
1989 as a contractual joint venture
company with limited liability
pursuant to the laws of China.
Through September 2010, it engaged
in the manufacture and sale of
consumer electronics and
telecommunications products. With
effect from October 1, 2010, the
businesses and operations of Namtai
Shenzhen were transferred to Zastron
Shenzhen. Namtai Shenzhen is in the
process of transforming into an
investment holding company.
    

Nam tai Holdings Limited
(formerly known as First Rich
Holdings Limited) (Nam Tai Holdings)
was incorporated on November 2, 2007
in the British Virgin Islands. It is
a holding company.100%Nam Tai Investment limited
(formerly known as Top Eastern
Investment Limited) (Nam Tai
Investment) was incorporated on
November 6, 2007 in Hong Kong. It is
a holding company.100%
    
    
    
    100%Zastron Electronic (Shenzhen)
Co. Ltd. (Zastron
Shenzhen) was established in the PRC
in 1992 as a company with limited
liability. It manufacturers
telecommunication components and
assemblies such as LCD modules and
FPC assemblies. Zastron Shenzhens
sister company, Jetup Electronic
(Shenzhen) Co. Ltd. (Jetup), also
wholly owned by Nam Tai Shenzhen and
engaged in the manufacture of LCD
panels and LCD modules, was merged
into Zastron Shenzhen effective on
April 1, 2010. Upon completion of
that merger, Jetup ceased to exist,
and its assets, liabilities and
operations were transferred to
Zastron Shenzhen. In October 2010,
the businesses and operations of
Namtai Shenzhen were transferred to
Zastron Shenzhen.
    

Wuxi Zastron Precision-Flex Co.
Ltd. (formerly known as Zastron
Precision- Flex (Wuxi) Co. Ltd.)
(Wuxi Zastron Flex) was established
in November 2006 as a wholly owned
foreign investment enterprise with
limited liability and pursuant to
the relevant laws of the PRC. This
company began manufacturing and
selling FPC boards and FPC
subassemblies during 2010. Wuxi
Zastron Flexs sister company, Wuxi
Zastron Precision-Tech Co. Ltd.
(Wuxi Zastron Tech), also wholly
owned by Nam Tai Investment, was
merged into Wuxi Zastron Flex
effective in April 2010. Upon
completion of that merger, Wuxi
Zastron Tech ceased to exist, and
its assets, liabilities and
operations were transferred to Wuxi
Zastron Flex.
 Capital Expenditures
  23




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##### Table of Contents




    
    $24 million for TFT mid-size 13 LCD module assembly line;
    
    $10 million for machinery and leasehold improvement for LCD panel and module assembly;
    
    $9 million for machinery used for FPC boards and assemblies; and
    
    $13.5 million for construction of a dormitory, labor union facilities and a R&D center.
  
    
    $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
    
    $0.5 million for other capital equipment.
  
    
    $23.7 million for new factory construction in Wuxi;
    
    $0.5 million for machinery mainly used for production of LCD modules; and
    
    $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.
  Business Overview
  Our Customers
  24




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##### Table of Contents



Year ended December 312008
    
    2009
    
    2010Hikari Alphax Co., Ltd.
    
    
    *
    
    
    
    12.2
    %
    
    
    24.7
    %Sony Computer Entertainment Europe Ltd.
    
    
    15.4
    %
    
    
    10.2
    %
    
    
    17.7
    %Sony Mobile Display Corporation
    
    
    *
    
    
    
    *
    
    
    
    16.7
    %Sharp Corporation
    
    
    15.3
    %
    
    
    17.9
    %
    
    
    11.9
    %Epson Imaging Devices Corporation
    
    
    16.5
    %
    
    
    23.0
    %
    
    
    *Sony Ericsson Mobile Communication International A B
    
    
    10.5
    %
    
    
    *
    
    
    
    *
 
 *
    
    Less than 10% of our total net sales during the year indicated.  Customer
    
    ProductsEpson Imaging Devices Corporation
    
    LCD modules for cellular phones and FPC subassembliesHikari 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 International AB
    
    Mobile phone digital camera accessories, headset
accessory containing Bluetooth wireless technology
and flashlights for mobile phonesSony Mobile Display Corporation
    
    LCD modulesStanley Electric (Asia Pacific) Ltd.
    
    LCD Panels for equipment and instrumentsTexas Instruments
    
    CalculatorsVtech Communications Ltd.
    
    LCD modules
   Our Products
   25




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##### Table of Contents



Year ended December 31,2008
    

2009
    
    2010Dollars
    
    Percent
    
    Dollars
    
    Percent
    
    Dollars
    
    PercentTCA
    
    
    351,487
    
    
    
    56
    %
    
    
    292,074
    
    
    
    72
    %
    
    
    401,259
    
    
    
    75
    %CECP
    
    
    271,365
    
    
    
    44
    %
    
    
    116,063
    
    
    
    28
    %
    
    
    133,161
    
    
    
    25
    %Total
    
    
    622,852
    
    
    
    100
    %
    
    
    408,137
    
    
    
    100
    %
    
    
    534,420
    
    
    
    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;
    
    1.9 high-frequency cordless telephones and home feature phones;
    
    Super thin (0.3-0.5mm glass substrates) LCD panels for application in watches and medical instruments;
    
    Irregular shaped LCD panels for telecommunications, automotive, white-good (major
household appliances) 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;
 26




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##### Table of Contents




    
    1.52  Color and monochrome STN LCD modules for application of hand held products,
such as cordless phones;
    

52-72 monochrome high resolution STN LCD modules with touch screens for
applications of VoIP phones, medical instruments and major appliances such as white
goods; and
    
    8.52 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, 2010, 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.
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. During 2005,
our subsidiary, Jetup
Electronic (Shenzhen) Co.
Ltd. (Jetup) also
started manufacturing COG
LCD modules. During 2010,
Jetup was merged into
Zastron Electronic
(Shenzhen) Co. Ltd.
(Zastron Shenzhen). As of
December 31, 2010, Zastron
Shenzhen had a total of 48
COG lines and is capable
of bonding 8.8 million
units of COG LCD modules a
month and is 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, 2010, we had
53 COB 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 three COB 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 are incorporated
into USB cameras, notebook
computers, mobile phones
and digital pens.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, 2010,
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.
 27




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##### Table of Contents



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, 2010, Zastron
had 32 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. Zastron Shenzhen is
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, 2010, 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, 2010, 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
Zastron Shenzhen, through
its predecessor, Jetup,
began producing STN LCDs
in 2002. Since 2005, our
two existing twisted
nematic, or TN type, LCD
lines to STN LCD lines
have been upgraded. 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, 2010, Zastron Shenzhen
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.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 0.2 millimeters +
0.2 millimeters LCD mother
glass up to dimension 550
millimeters x 670
millimeters, with cutting
tolerance +/-0.1
millimeters.
   28




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##### Table of Contents



FPC boards and FPC Subassemblies
 Flexible Printed Circuit Subassemblies.
 Flexible Printed Circuits
 FPC Boards.
  Quality Control
    
    
    ISO 9001:2008
    
    Basic Quality Management System
    
    ISO 14001:2004
    
    Environmental Management System
    
    QC080000:2005
    
    Hazardous Substance Process Management System
    
    OHASA18001:2007
    
    Occupational Health & Safety Management System
 29




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##### Table of Contents




    
    TS16949:2009
    
    Quality Management System specific for Automotive products
    
    ISO13485:2003
    
    Quality Management System specific for Medical products
   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 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.
    30




---



##### Table of Contents



Production Scheduling
       31




---



##### Table of Contents



Sales and Marketing
   Seasonality
   Transportation
  Competition
  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 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.
 32




---



##### Table of Contents



Product/Service
    
    CompetitorLiquid crystal display, or LCD, panels
    
        Tianma Microelectronics Co., Ltd    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/FPC Subassemblies
    
        Ichia Technologies Inc    Nitto Denko (HK) Ltd.    NOK Corporation
   Research and Development
   Patents, Licenses and Trademarks
  Property, Plant and Equipment
   33




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##### Table of Contents



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 FPC subassemblies, LCD modules and other products
    
    
    2056
    (3)Other propertyGuangming, Shenzhen, China
    
    
    1,270,160
    
    
    LCD modules and other products
    
    
    2057
    (4)
 
 (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 leases. 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 mass production at this factory began in 2010.(4)
    
    Raw land. Hong Kong
    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
 34




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##### Table of Contents




    
    two additional blocks of dormitories , which we completed during 2005.
  LCD Factory
  Wuxi, China
   Planned and Future Expansion
      Item
 35




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##### Table of Contents



ITEM 4A. UNRESOLVED STAFF COMMENTS
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 Item Item
 Operating Results
 Overview
   Net Sales and Cost of Sales
   Gross Margins
    36




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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 rate2008
    
    18%
    
    25%2009
    
    20%
    
    25%2010
    
    22%
    
    25%2011
    
    24%
    
    25%2012
    
    25%
    
    25%
  Year Ended December 31,2008
    
    2009
    
    2010Applicable statutory tax rates
    
    
    18
    %
    
    
    20
    %
    
    
    22
    %Effect of difference between Hong Kong and PRC tax rates applied to Hong Kong income
    
    
    
    
    
    
    65
    
    
    
    1Effect of change in tax law
    
    
    (1
    )
    
    
    (49
    )
    
    
    (1
    )Change in valuation allowance
    
    
    3
    
    
    
    (37
    )
    
    
    (4
    )Deferred tax liability on withholding tax on undistributed profits of PRC subsidiaries
    
    
    2
    
    
    
    49
    
    
    
    2Effect of loss/income for which no income tax benefit/expense is receivable/payable
    
    
    (19
    )
    
    
    102
    
    
    
    4Other items
    
    
    4
    
    
    
    22
    
    
    
    2Effective tax rates
    
    
    7
    %
    
    
    172
    %
    
    
    26
    %
 37




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##### Table of Contents



Critical Accounting Policies and Estimates
   Allowance for doubtful accounts
   Impairment of long-lived assets and goodwill
 Long-lived assets
  Property, Plant and Equipment
   38




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##### Table of Contents



Goodwill
   Accruals and provisions for loss contingencies
   Workforce Reduction in 2009
  Summary of Results
   39




---



##### Table of Contents



Year Ended December 31,
    
    % increase/(decrease)2008
    
    2009
    
    2010
    
    2009 vs 2008
    
    2010 vs 2009Net sales
    
    $
    622,852
    
    
    $
    408,137
    
    
    $
    534,420
    
    
    
    (34.5
    )%
    
    
    30.9
    %Gross profit
    
    
    70,678
    
    
    
    40,320
    
    
    
    51,294
    
    
    
    (43.0
    )
    
    
    27.2Operating income
    
    
    6,386
    
    
    
    388
    
    
    
    14,801
    
    
    
    (93.9
    )
    
    
    3,714.7Net income attributable to Nam Tai shareholders
    
    
    30,635
    
    
    
    1,652
    
    
    
    15,006
    
    
    
    (94.6
    )
    
    
    808.4Basic earnings per share
    
    $
    0.68
    
    
    $
    0.04
    
    
    $
    0.33
    
    
    
    (94.1
    )
    
    
    725.0Diluted earnings per share
    
    $
    0.68
    
    
    $
    0.04
    
    
    $
    0.33
    
    
    
    (94.1
    )
    
    
    725.0
 Key Performance Indicators
  2009
    
    2010Days in:
    

Mar. 31
    

Jun. 30
    
    Sept. 30
    
    Dec. 31
    

Mar. 31
    

Jun. 30
    
    Sept. 30
    
    Dec. 31Sales cycle (1)
    
    
    15
    
    
    
    13
    
    
    
    15
    
    
    
    9
    
    
    
    15
    
    
    
    11
    
    
    
    9
    
    
    
    9Inventory
turnover (2)
    
    
    16
    
    
    
    16
    
    
    
    14
    
    
    
    16
    
    
    
    18
    
    
    
    24
    
    
    
    24
    
    
    
    22Accounts
receivable (3)
    
    
    52
    
    
    
    59
    
    
    
    63
    
    
    
    52
    
    
    
    58
    
    
    
    73
    
    
    
    67
    
    
    
    51Accounts
payable (4)
    
    
    53
    
    
    
    62
    
    
    
    62
    
    
    
    59
    
    
    
    61
    
    
    
    86
    
    
    
    82
    
    
    
    64
 March 31
    
    June 30
    
    September 30
    
    December 31Days in:
    
    2009
    
    2010
    
    2009
    
    2010
    
    2009
    
    2010
    
    2009
    
    2010Sales cycle (1)
    
    
    15
    
    
    
    15
    
    
    
    13
    
    
    
    11
    
    
    
    15
    
    
    
    9
    
    
    
    9
    
    
    
    9Inventory turnover (2)
    
    
    16
    
    
    
    18
    
    
    
    16
    
    
    
    24
    
    
    
    14
    
    
    
    24
    
    
    
    16
    
    
    
    22Accounts receivable (3)
    
    
    52
    
    
    
    58
    
    
    
    59
    
    
    
    73
    
    
    
    63
    
    
    
    67
    
    
    
    52
    
    
    
    51Accounts payable (4)
    
    
    53
    
    
    
    61
    
    
    
    62
    
    
    
    86
    
    
    
    62
    
    
    
    82
    
    
    
    59
    
    
    
    64
 
 (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. Results of Operations
  Year Ended December 31,2008
    
    2009
    
    2010Net Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    (88.7
    )
    
    
    (90.1
    )
    
    
    (90.4
    )Gross profit
    
    
    11.3
    
    
    
    9.9
    
    
    
    9.6General and administrative expenses
    
    
    (4.7
    )
    
    
    (6.9
    )
    
    
    (4.7
    )Selling expenses
    
    
    (1.1
    )
    
    
    (1.3
    )
    
    
    (1.0
    )Research and development expenses
    
    
    (1.7
    )
    
    
    (1.6
    )
    
    
    (1.1
    )Impairment loss on goodwill
    
    
    (2.8
    )
    
    
    
    
    
    
    Operating income
    
    
    1.0
    
    
    
    0.1
    
    
    
    2.8Other income (expense), net
    
    
    1.1
    
    
    
    (0.1
    )
    
    
    0.7Gain on sale of subsidiaries shares
    
    
    3.2
    
    
    
    
    
    
    
    Interest income
    
    
    1.1
    
    
    
    0.2
    
    
    
    0.3Interest expense
    
    
    (0.1
    )
    
    
    
    
    
    
    Income before income taxes
    
    
    6.3
    
    
    
    0.2
    
    
    
    3.8Income taxes
    
    
    (0.5
    )
    
    
    (0.3
    )
    
    
    (1.0
    )Consolidated net income (loss)
    
    
    5.8
    
    
    
    (0.1
    )
    
    
    2.8Net (income) loss attributable to noncontrolling interests
    
    
    (0.9
    )
    
    
    0.5
    
    
    
    Net income attributable to Nam Tai shareholders
    
    
    4.9
    %
    
    
    0.4
    %
    
    
    2.8
    %
 40




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##### Table of Contents



Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
 Net Sales.
  Year ended December 31,20102009
    
    
    2010
    
    
    vs. 2009Dollars
    
    
    
    
    
    
    Dollars(in thousands)
    
    
    Percent
    
    
    (in thousands)
    
    
    Percent
    
    
    PercentTCA
    
    $
    292,074
    
    
    
    72
    %
    
    $
    401,259
    
    
    
    75
    %
    
    
    37.4
    %CECP
    
    
    116,063
    
    
    
    28
    
    
    
    133,161
    
    
    
    25
    
    
    
    14.7Total net sales
    
    $
    408,137
    
    
    
    100
    %
    
    $
    534,420
    
    
    
    100
    %
    
    
    30.9
    %
   Gross Profit.
 General and Administrative Expenses.
 Selling Expenses.
 Research and Development Expenses.
 41




---



##### Table of Contents



Other Income, Net.
 Interest Income.
 Interest Expense
 Income Taxes
 Net
Income attributable to Nam Tai shareholders
    Year ended December 31,20102009
    
    
    2010
    
    

vs. 2009Dollars
    
    
    
    
    
    
    Dollars(in thousands)
    
    
    Percent
    
    
    (in thousands)
    
    
    Percent
    
    
    Percent(1)TCA
    
    $
    (573
    )
    
    
    (34.7
    )%
    
    $
    6,617
    
    
    
    44.1
    %
    
    
    n/a
    %CECP
    
    
    6,710
    
    
    
    406.2
    
    
    
    13,969
    
    
    
    93.1
    
    
    
    108.2Corporate
    
    
    (4,485
    )
    
    
    (271.5
    )
    
    
    (5,580
    )
    
    
    (37.2
    )
    
    
    n/aNet income
attributable to Nam
Tai shareholders
    
    $
    1,652
    
    
    
    100.0
    %
    
    $
    15,006
    
    
    
    100.0
    %
    
    
    808.4
    %
  (1)
    Year Ended December 31, 2009 Compared to Year Ended December 31, 2008
 Net Sales.
  42




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##### Table of Contents



Year ended December 31,2008
    
    
    2009
    
    
    2009 vs. 2008Dollars
    
    
    
    
    
    
    Dollars(in thousands)
    
    
    Percent
    
    
    (in thousands)
    
    
    Percent
    
    
    PercentTCA
    
    $
    351,487
    
    
    
    56
    %
    
    $
    292,074
    
    
    
    72
    %
    
    
    (16.9
    )%CECP
    
    
    271,365
    
    
    
    44
    
    
    
    116,063
    
    
    
    28
    
    
    
    (57.2
    )Total net sales
    
    $
    622,852
    
    
    
    100
    %
    
    $
    408,137
    
    
    
    100
    %
    
    
    (34.5
    )%
   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
 43




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##### Table of Contents



Net Income Attributable to Nam Tai Shareholders.
 Year ended December 31,
    
    
    2009 vs.2008
    
    
    2009
    
    
    2008Dollars
    
    
    
    
    
    
    Dollars(in thousands)
    
    
    Percent
    
    
    (in thousands)
    
    
    Percent
    
    

Percent(1)TCA
    
    $
    (17,064
    )
    
    
    (55.7
    )%
    
    $
    (573
    )
    
    
    (34.7
    )%
    
    
    n/a
    %CECP
    
    
    27,359
    
    
    
    89.3
    
    
    
    6,710
    
    
    
    406.2
    
    
    
    (75.5
    )Corporate
    
    
    20,340
    
    
    
    66.4
    
    
    
    (4,485
    )
    
    
    (271.5
    )
    
    
    n/aTotal net income attributable to Nam Tai shareholders
    
    $
    30,635
    
    
    
    100.0
    %
    
    $
    1,652
    
    
    
    100.0
    %
    
    
    (94.6)
    %
  (1)
  ®
  Liquidity and Capital Resources
 Liquidity
    
    
    cash and cash equivalents resulted primarily from the increase in sales in 2010;
    
    the $43.4 million used in the acquisition of shares in privatization of NTEEP in 2009; and
    
    the decrease in purchase of property, plant and equipment in 2010.
  Item
 44




---



##### Table of Contents



Year Ended December 31,2008
    
    
    2009
    
    
    2010Net cash provided by operating activities
    
    $
    36,791
    
    
    $
    38,503
    
    
    $
    34,893Net cash (used in) provided by investing activities
    
    
    (34,723
    )
    
    
    (74,781
    )
    
    
    8,217Net cash used in financing activities
    
    
    (42,267
    )
    
    
    (18,056
    )
    
    
    Net (decrease) increase in cash and cash equivalents
    
    $
    (40,199
    )
    
    $
    (54,334
    )
    
    $
    43,110
            Capital Resources
     45




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##### Table of Contents



Payments (in thousands) due by periodContractual Obligations
    
    Total
    
    2011
    
    2012 to 2013
    
    2014 to 2015
    
    After 2015Long-term debt obligations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital (finance) lease obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating lease obligations
    
    
    1,016
    
    
    
    1,016
    
    
    
    
    
    
    
    
    
    
    
    Purchase obligations:Capital commitments
    
    
    4,923
    
    
    
    4,923
    
    
    
    
    
    
    
    
    
    
    
    Other purchase obligations
    
    
    67,965
    
    
    
    67,965
    
    
    
    
    
    
    
    
    
    
    
    Other long-term liabilities reflected
on the Companys balance sheet
under US GAAP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    73,904
    
    
    $
    73,904
    
    
    $
    
    
    
    $
    
    
    
    $
    
  Impact of Inflation
   Exchange Controls
  Recent Changes in Accounting Standards
 Fair Value Measurements and Disclosures
(Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its
Equivalent)
 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
 46




---



##### Table of Contents



Consolidation (Topic 810)
     Research and Development
  Trend Information
  47




---



##### Table of Contents



Off-balance Sheet Arrangements
  48




---



##### Table of Contents



ITEM 6. DIRECTORS AND SENIOR MANAGEMENT
 Directors and Senior Managers
  Name
    
    Age
    
    Position with Nam Tai or its SubsidiariesM. K. Koo
    
    
    66
    
    
    Nam Tais Executive Chairman and Chief Financial Officer;
NTEEPs President and a directorColin Yeoh
    
    
    46
    
    
    Chief Executive Officer of Nam Tai and a director of NTEEPIvan Chui
    
    
    52
    
    
    Chief Marketing Officer of Nam TaiTohru Odashima
    
    
    60
    
    
    President of Wuxi ManufacturingPeter R. Kellogg
    
    
    68
    
    
    Member of the Board of DirectorsDr. Wing Yan (William) Lo
    
    
    50
    
    
    Member of the Board of DirectorsCharles Chu
    
    
    54
    
    
    Member of the Board of DirectorsMark Waslen
    
    
    50
    
    
    Member of the Board of Directors
 M. K. Koo.
 Colin Yeoh.
 Ivan Chui
 Tohru Odashima.
 Peter R. Kellogg.
 Dr. Wing Yan (William) Lo
 49




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##### Table of Contents



Charles Chu.
 Mark Waslen
  Compensation of Directors and Senior Management
 Compensation on an Aggregate Basis
       50




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##### 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
    
    
    46,100
    
    
    
    23,700
    
    
    
    
    
    
    
    69,800Charles Chu
    
    
    52,950
    
    
    
    23,700
    
    
    
    
    
    
    
    76,650Dr. Wing Yan (William) Lo
    
    
    50,800
    
    
    
    23,700
    
    
    
    
    
    
    
    74,500Mark Waslen
    
    
    49,000
    
    
    
    23,700
    
    
    
    
    
    
    
    72,700
 
 (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 the year and Held by Directors, at December 31, 2010
  Compensation on an Individual Basis  Executive Officers
  
 *
    
    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 2011 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. 51




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##### Table of Contents



Summary Compensation Table
 OtherSalary
    
    comp. andName and Principal Position
    
    Year
    
    ($)(1)
    
    benefits ($)(2)
    
    Total ($)Koo Ming Kown
    
    
    2010
    
    
    
    212,915
    (3)
    
    
    236,079
    (4)
    
    
    448,994Chief Financial Officer and
    
    
    2009
    
    
    
    10
    (3)
    
    
    199,720
    (4)
    
    
    199,730Chairman of the Board of Nam Tai;
    
    
    2008
    
    
    
    
    
    
    
    68,931
    (4)
    
    
    68,931President of NTEEPColin Yeoh(5)
    
    
    2010
    
    
    
    213,523
    
    
    
    829,411
    
    
    
    1,042,934Chief Executive Officer
    
    
    2009
    
    
    
    171,304
    
    
    
    4,191
    
    
    
    175,495of Nam Tai
    
    
    2008
    
    
    
    201,184
    
    
    
    1,587
    
    
    
    202,771Ivan Chui(6)Chief Marketing Officer
    
    
    2010
    
    
    
    219,691
    
    
    
    551,757
    
    
    
    771,448of Zastron Shenzhen
    
    
    2009
    
    
    
    
    
    
    
    129,032
    
    
    
    129,0322008
    
    
    
    176,282
    
    
    
    
    
    
    
    176,282Patinda Lei(7)
    
    
    2010
    
    
    
    180,492
    
    
    
    4,166
    
    
    
    184,658Marketing Director of Zastron Shenzhen
    
    
    2009
    
    
    
    181,993
    
    
    
    3,457
    
    
    
    185,4502008
    
    
    
    358,974
    
    
    
    9,637
    
    
    
    368,611
 
 (1)
    
    Consists of the basic salary earned by the named executive officers during the year
indicated. All cash compensation included in the table was paid to Nam Tais senior executives
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 2010 and 2009, and $1.00:HK$7.80 for 2008.(2)
    
    To the extent applicable to the named individual, consists of amounts paid for housing, golf
club membership fees, mandatory provident fund, life, medical, travel, social security,
unemployment compensation, welfare and accident insurance premiums, bonus and fees for annual
physical examination. The value of stock options is not included.(3)
    
    Mr. Koo was appointed as Nam Tais Chief Financial Officer effective March 1, 2009. Prior to
March 1, 2009, Mr. Koo served on Nam Tais Board of Directors as Non-executive Chairman of the
Board and since March 1, 2009 has served as Executive Chairman of the Board. Mr. Koos salary
for serving as Nam Tais Chief Financial Officer during 2009 and 2010 was $1.00 per month.
Effective on October 1, 2010, in addition to his duties as Nam Tais Chief Financial Officer,
Mr. Koo was appointed as President of NTEEP, his salary for serving as Nam Tais Chief
Financial Officer was confirmed at $1.00 per month and his salary for serving as President of
NTEEP was fixed at approximately $850,000 annually and an annual
bonus of 1.5 months of his monthly salary of approximately $106,000. See Item 7. Major Shareholders and
Related Party Transactions  Certain Relationships and Related Party Transactions.(4)
    
    All other compensation and benefits for 2010
includes insurance premiums and fees for annual physical examination, $147,049 in rental charges paid for housing provided for Mr. Koo and
$26,613 which Nam Tai has accrued as a bonus to Mr. Koo for services in 2010, but is
payable to Mr. Koo in March 2011. All other compensation and benefits for 2009 included
insurance premiums, golf membership expenses and $136,649 in rental charges paid for housing
provided for Mr. Koo. Amounts of $833,333 and $750,000 previously accrued by the Company
during 2009 and 2010 respectively for payment to Mr. Koo if he remained as Nam Tais CFO from
March 1, 2009 through and after February 29, 2012 have not been included in the table since
the Companys obligation therefore was terminated in October 2010 and Mr. Koo has never
received payment of those amounts during 2009 or 2010. See Item 7. Major Shareholders and
Related Party Transactions  Certain Relationships and Related Party Transactions for a
discussion of the compensation payable and previously payable to Mr. Koo as Nam Tais CFO.
All other compensation and benefits in 2010, 2009 and 2008 also includes directors fees of
$37,250, $42,750 and $42,000, respectively. All other compensation and benefits in 2008
includes $13,650 actually paid to Mr. Koo when his outstanding stock options were repurchased
at the same time that all other director options were repurchased in 2008. Because (a) options
to purchase 15,000 shares granted in 2009 to Mr. Koo were surrendered and cancelled within a
few months thereafter, and (b) options to purchase 15,000 shares granted in 2008 to Mr. Koo as
a then independent director of Nam Tai were among the options repurchased by Nam Tai a few
months thereafter, in order to avoid the appearance that Mr. Koo received duplicate
compensation, all other compensation and benefits in 2009 and 2008 do not include $13,350
and $27,900, respectively, which were the dollar amounts for the options granted to Mr. Koo in
2009 and 2008, respectively, that Nam Tai recognized for financial statement reporting
purposes in accordance with FASB ASC 718.(5)
    
    Appointed as CEO of Nam Tai effective December 1, 2009. Compensation for 2008 through
November 30, 2009 was paid to Dr. Yeoh in other executive capacities. Other compensation and
benefits for 2010 includes an incentive bonus of $825,000, which the Company accrued for
2010, but is payable by the end of March 2011.(6)
    
    Appointed as Business Development President of Zastron Shenzhen in December 2009 and as Nam
Tais Chief Marketing Officer in April 1, 2010. Compensation for 2008 through November 2009
was paid to Mr. Chui in other executive capacities. Other compensation and benefits for 2010
includes an incentive bonus of $551,000, which the Company accrued for 2010, but is payable by
the end of March 2011.(7)
    
    Appointed as Vice CEO of the Zastron Shenzhen in November 2008. She was appointed as
Marketing Director of Zastron Shenzhen in April 1, 2010. 52




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##### Table of Contents



Retirement Benefits
  Number
    
    Value at
    
    Companyof years
    
    December 31, 2010 of
    
    Paymentsof credited
    
    Accumulated
    
    DuringName
    
    Service
    
    Benefits ($)
    
    2010 ($)Koo Ming Kown
    
    
    36.0
    (1)
    
    
    N/A
    
    
    
    N/AColin Yeoh
    
    
    7.3
    
    
    
    3,865
    
    
    
    1,548Ivan Chui
    
    
    10.2
    
    
    
    12,308
    
    
    
    N/APatinda Lei
    
    
    10.0
    
    
    
    12,308
    
    
    
    N/A
 
 (1)
    
    Prior to October 2010, 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.
Although he was appointed President of our subsidiary, NTEEP, effective October 1, 2010,
contributions are not required for Mr. Koo under Hong Kongs Mandatory Provident Retirement
Fund because he is over 65 years old. Options Held by Executive Officers at December 31, 2010
  Board Practices
 Item
  Corporate Governance Guidelines
  shareholder@namtai.com
 Effective on April 1, 2011
    
    Effective before April 1, 2011Unit 1201, 12th Floor, Tower 1, Lippo Centre,
    
    Units 5811-12, 58/F, The Center,89 Queensway, Admiralty, Hong KongFacsimile: (852) 2263 1001
    
    99 Queens Road Central, Central, Hong KongFacsimile: (852) 2263 1223
 NYSE Listed Company Manual Disclosure
  53




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##### Table of Contents



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 members(1) 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 member(1), 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 members (1) 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 members (1) 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 members (1), 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
    
    who is not an employee of, or whose immediate family members (1)
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.
 
 (1)
    
    An immediate family member includes a persons spouse, parents, children, siblings,
mothers- and father-in-law, sons-and daughters-in-law, brothers and sisters-in-law, and anyone
(other than domestic employees) who shares such persons home. Audit Committee
   54




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##### Table of Contents



Compensation Committee
   Nominating / Corporate Governance Committee
   Stock Options of Directors and Senior Management
  Share Ownership of Directors and Senior Management
 Item
 Employee Stock Option Plans
     Employees
  55




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##### Table of Contents



At December 31,Geographic Location
    
    Main Activity
    
    2008
    
    2009
    
    2010Shenzhen, PRC
    
    Manufacturing
    
    
    5,225
    
    
    
    3,734
    
    
    
    4,153Research and development
    
    
    310
    
    
    
    156
    
    
    
    96Quality control
    
    
    484
    
    
    
    274
    
    
    
    297Engineering
    
    
    277
    
    
    
    168
    
    
    
    158Administration
    
    
    403
    
    
    
    302
    
    
    
    289Marketing
    
    
    105
    
    
    
    64
    
    
    
    57Support(1)
    
    
    238
    
    
    
    160
    
    
    
    155Total Shenzhen
    
    
    7,042
    
    
    
    4,858
    
    
    
    5,205Wuxi, PRC
    
    Manufacturing
    
    
    5
    
    
    
    153
    
    
    
    366Research and development
    
    
    3
    
    
    
    15
    
    
    
    21Quality control
    
    
    5
    
    
    
    41
    
    
    
    70Engineering
    
    
    7
    
    
    
    35
    
    
    
    43Administration
    
    
    15
    
    
    
    76
    
    
    
    81Marketing
    
    
    4
    
    
    
    7
    
    
    
    11Support(1)
    
    
    7
    
    
    
    13
    
    
    
    21Total Wuxi
    
    
    46
    
    
    
    340
    
    
    
    613Hong Kong
    
    Administration
    
    
    8
    
    
    
    5
    
    
    
    6Total Hong Kong
    
    
    8
    
    
    
    5
    
    
    
    6Macao
    
    Administration
    
    
    5
    
    
    
    
    
    
    
    Total Macao
    
    
    5
    
    
    
    
    
    
    
    Japan
    
    Administration
    
    
    2
    
    
    
    
    
    
    
    Marketing
    
    
    1
    
    
    
    
    
    
    
    Research & Development
    
    
    
    
    
    
    
    
    
    
    Total Japan
    
    
    3
    
    
    
    
    
    
    
    Total employees
    
    
    7,104
    
    
    
    5,203
    
    
    
    5,824
 
 (1)
    
    Employees categorized in support include personnel engaged in procurement, customs,
shipping and warehouse services.  56




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##### Table of Contents



ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 Shares and Options Ownership of Directors, Senior Management and Principal Shareholders
  Shares beneficially owned(1)Name
    
    Number
    
    PercentPeter R. Kellogg
    
    
    5,826,180
    (2)
    
    
    13.0
    %M. K. Koo
    
    
    5,242,786
    (3)
    
    
    11.7
    %I.A.T. Reinsurance Syndicate Ltd.
    
    
    5,224,800
    (2)
    
    
    11.7
    %Kahn Brothers LLC
    
    
    2,481,289
    (4)
    
    
    5.5
    %Ivan Chui
    
    
    295,870
    
    
    
    
    *Colin Yeoh
    
    
    10,000
    
    
    
    
    *Charles Chu
    
    
    32,500
    (5)
    
    
    
    *Wing Yan (William) Lo
    
    
    30,000
    (6)
    
    
    
    *Mark Waslen
    
    
    40,000
    (5)
    
    
    
    *
 
 *
    
    Less than 1%.(1)
    
    Percentage of ownership is based on 44,803,735 common shares outstanding as of February 28,
2011. 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, 2011 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 30,000
shares, which he received in 2009 and 2010 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.(4)
    
    Based on a Schedule 13G filed with the SEC by the beneficial holder on February 7, 2011.(5)
    
    Includes options to purchase 30,000 shares.(6)
    
    Consists of options to purchase 30,000 shares.    Percentage
Ownership
(1)at February 28,2009
    
    2010
    
    2011Peter R. Kellogg (2)
    
    
    12.9
    %
    
    
    13.0
    %
    
    
    13.0
    %M. K. Koo
    
    
    11.7
    %
    
    
    11.7
    %
    
    
    11.7
    %I.A.T. Reinsurance Syndicate Ltd.
    
    
    11.7
    %
    
    
    11.7
    %
    
    
    11.7
    %Kahn Brothers LLC
    
    
    
    (3)
    
    
    
    (3)
    
    
    5.5
    %(4)Royce & Associates, LLC
    
    
    5.1
    %               (5)
    
    
    5.2
    %              (6)
    
    
    4.6
    %(7)Renaissance Technologies LLC and James H. Simons
    
    
    5.5
    %               (8)
    
    
    4.0
    %              (9)
    
    
    
    (10)
 
 (1)
    
    Based on 44,803,735 common shares outstanding on February 28, 2009, 2010 and 2011. 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,
2011 57




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##### Table of Contents



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 30,000
shares, which he received in 2009 and 2010 as a director of Nam Tai.(3)
    
    The holder did not make a filing with the SEC under Rule 13d-1 or 13d-2 of the Securities
Exchange Act of 1934 for its holdings in 2009 and 2010 and Nam Tai has no information
regarding the holders beneficial ownership of its shares for these years.(4)
    
    Based on a Schedule 13G filed with the SEC by the beneficial holder on February 7, 2011.(5)
    
    Based on Schedule 13G filed with the SEC by the beneficial holder on January 27, 2009.(6)
    
    Based on Amendment No. 1 to Schedule 13G filed with the SEC by the beneficial holder on
January 26, 2010.(7)
    
    Based on Amendment No. 2 to Schedule 13G filed with the SEC by the beneficial holder on
February 4, 2011.(8)
    
    Based on a Schedule 13G filed with the SEC by the beneficial holders on February 13, 2009.(9)
    
    Based on Amendment No. 1 to Schedule 13G filed with the SEC by the beneficial holders on
February 12, 2010.(10)
    
    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 (9) 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 (9).  Certain Relationships and Related Party Transactions
    
    
    Nam Tais terminates Mr. Koo for any reason other than for his commission of a
criminal act, Nam Tai has agreed to pay Mr. Koo an amount which is equal to 36 months of
his basic monthly salary, all bonuses and allowances and so on that he is entitled at
the time of termination; and
    
    Mr. Koo wishes to terminate his employment with Nam Tai, except in cases of illness
or other health conditions that prevent him from working, he must provide Nam Tai with
one years prior written Notice.
  58




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##### Table of Contents



ITEM 8. FINANCIAL INFORMATION
 Financial Statements
  Legal Proceedings
  Tax Dispute with Hong Kong Inland Revenue Department
  (1)
    
    NTTC
     (2)
    
    NTGM
   (3)
    
    NTT
   59




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##### Table of Contents



(4)
    
    Expected Dispositions of Tax Disputes with Inactive or Dormant
Subsidiaries
   (5)
    
    Notices of Alleged Personal Liability for Additional Taxes Against Former
Directors and Officers for Signing NTTCs Tax Returns
       Export Sales
  Year Ended December 31,Geographic Areas
    
    2008
    
    2009
    
    2010Japan
    
    
    2
    %
    
    
    35
    %
    
    
    55
    %Hong Kong
    
    
    36
    
    
    
    28
    
    
    
    19Europe
    
    
    22
    
    
    
    12
    
    
    
    12United States
    
    
    17
    
    
    
    10
    
    
    
    10China (excluding Hong Kong)
    
    
    14
    
    
    
    11
    
    
    
    3North America (excluding United States)
    
    
    3
    
    
    
    
    
    
    
    Korea
    
    
    2
    
    
    
    
    
    
    
    Others
    
    
    4
    
    
    
    4
    
    
    
    1100
    %
    
    
    100
    %
    
    
    100
    %
 60




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##### Table of Contents



Dividends
    Dividends declared for 2011Dividend perQuarterly Payment
    
    Record Date
    
    Period Scheduled
    
    shareQ1 2011
    
    December 31, 2010
    
    January 20 - 31, 2011
    
    $
    0.05Q2 2011
    
    March 31, 2011
    
    April 20 - 30, 2011
    
    
    0.05Q3 2011
    
    June 30, 2011
    
    July 20 - 31, 2011
    
    
    0.05Q4 2011
    
    September 30, 2011
    
    October 20 - 31, 2011
    
    
    0.05Total for full year 2011
    
    $
    0.20
 Item
  Year ended December 31,2006
    
    2007
    
    2008
    
    2009
    
    2010(1)Total dividends declared (in thousands)
    
    $
    66,497
    
    
    $
    37,635
    
    
    $
    39,427
    
    
    $
    
    
    
    $
    8,961Regular dividends per share
    
    $
    1.44
    
    
    $
    0.84
    
    
    $
    0.88
    
    
    $
    
    
    
    $
    0.20Special dividends(2)
    
    $
    0.08
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Total dividends per share
    
    $
    1.52
    
    
    $
    0.84
    
    
    $
    0.88
    
    
    $
    
    
    
    $
    0.20
 
 (1)
    
    Consists of dividend declared in 2010 payable quarterly in 2011. See the table above setting
forth the schedule for Nam Tais dividends declared in 2010 payable in and for 2011.(2)
    
    We declared special dividends in 2006 in celebration of thirtieth anniversary of Nam Tais
founding and its fifth consecutive quarter of record-breaking sales. 
 ITEM 9. THE LISTING
   61




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##### Table of Contents



2008
    
    2009
    
    2010Average
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    AverageDaily
    
    
    
    
    
    
    
    
    
    Daily
    
    
    
    
    
    
    
    
    
    DailyTrading
    
    
    
    
    
    
    
    
    
    Trading
    
    
    
    
    
    
    
    
    
    TradingHigh
    
    Low
    
    Volume(1)
    
    High
    
    Low
    
    Volume(1)
    
    High
    
    Low
    
    Volume(1)1st Quarter
    
    $
    11.92
    
    
    $
    8.37
    
    
    
    326,052
    
    
    $
    6.16
    
    
    $
    2.83
    
    
    
    271,989
    
    
    $
    5.30
    
    
    $
    4.33
    
    
    
    131,3612nd Quarter
    
    
    13.31
    
    
    
    9.62
    
    
    
    197,453
    
    
    
    4.71
    
    
    
    3.80
    
    
    
    189,192
    
    
    
    5.04
    
    
    
    4.12
    
    
    
    81,6223rd Quarter
    
    
    12.99
    
    
    
    8.02
    
    
    
    198,363
    
    
    
    6.03
    
    
    
    4.05
    
    
    
    141,355
    
    
    
    4.95
    
    
    
    4.07
    
    
    
    78,0164th Quarter
    
    
    8.16
    
    
    
    4.79
    
    
    
    248,775
    
    
    
    5.96
    
    
    
    5.10
    
    
    
    99,584
    
    
    
    6.82
    
    
    
    4.61
    
    
    
    164,645
 
 (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 December 31,
    
    High
    
    Low
    
    Trading Volume(1)2010
    
    $6.82
    
    $4.07
    
    113,8312009
    
    6.16
    
    2.83
    
    174,3272008
    
    13.31
    
    4.79
    
    241,6722007
    
    15.28
    
    11.02
    
    238,0182006
    
    24.27
    
    11.43
    
    305,468
 
 (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, 2011
    
    $
    7.84
    
    
    $
    6.45
    
    
    
    148,121January 31, 2011
    
    
    6.61
    
    
    
    6.28
    
    
    
    79,730December 31, 2010
    
    
    6.82
    
    
    
    6.15
    
    
    
    137,709November 30, 2010
    
    
    6.49
    
    
    
    5.96
    
    
    
    302,738October 31, 2010
    
    
    4.89
    
    
    
    4.61
    
    
    
    54,771September 30, 2010
    
    
    4.88
    
    
    
    4.62
    
    
    
    53,267
 
 (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
    62




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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.
    
    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.
 63




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##### Table of Contents




    
    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
      64




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##### Table of Contents



Exchange Controls
  Taxation
 United States Federal Income Tax Consequences
  General
  
    
    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.
 65




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##### Table of Contents



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
    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
 66




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##### Table of Contents




    
    your ability to deduct capital losses is subject to limitations.
 PFIC Considerations
        Non-U.S. Holders
  Distributions on Our Common Shares
  67




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##### Table of Contents




    
    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.
  Documents on Display
  68




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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Currency Fluctuations and foreign Exchange Risk
   Hong Kong Dollar
  Japanese Yen
  
 Item
 69




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##### Table of Contents



Chinese Renminbi
     Currency Hedging
   Currencies included in Cash and Cash Equivalents and Fixed Deposits Maturing Over Three Months
  Year ended December 312009
    
    
    2010Currencies included in cash and cash equivalents and fixed deposits maturing over three months
    
    (In thousands)United States dollars
    
    $
    71,891
    
    
    $
    74,392Chinese renminbi
    
    
    55,691
    
    
    
    92,731Japanese yen
    
    
    2,557
    
    
    
    1,695Hong Kong dollars
    
    
    65,486
    
    
    
    59,249Total US$ equivalent
    
    $
    195,625
    
    
    $
    228,067
 Interest Rate Risk
 Interest rate risk
    70




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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(1)
(2)
    }
    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.(3)
(4)
    }
    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.
 71




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##### Table of Contents



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
  72




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal
Control  Integrated Framework
    Internal
Control  Integrated Framework
   
 73




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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
  
 ITEM 16 B. CODE OF ETHICS
  shareholder@namtai.com
 Effective on April 1, 2011
    
    Effective before April 1, 2011Unit 1201, 12th Floor, Tower 1, Lippo Centre,
    
    Units 5811-12, 58/F, The Center,89 Queensway, Admiralty, Hong Kong
Facsimile (852) 2263 1001
    
    99 Queens Road Central, Central, Hong Kong
Facsimile: (852) 2263 1223
 
 ITEM 16 C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   Year ended December 312009
    
    
    2010Audit Fees (1)
    
    $
    329
    
    
    $
    371Audit-related Fees (2)
    
    
    8
    
    
    
    Tax Fees (3)
    
    
    4
    
    
    
    3Total
    
    $
    341
    
    
    $
    374
 
 (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. 74




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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. 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 16 F. CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT
  
 ITEM 16 G. CORPORATE GOVERNANCE
 tem
 75




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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, 2008, 2009 and 2010
    
    
    F-3Consolidated Balance Sheets as of December 31, 2009 and 2010
    
    
    F-4Consolidated Statements of Changes in Equity and Comprehensive Income for the years ended
December 31, 2008, 2009 and 2010
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2009 and 2010
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-8Schedule 1 Nam Tai Electronics, Inc. Statements of Income
    
    
    F-30Schedule 1 Nam Tai Electronics, Inc. Balance Sheets
    
    
    F-31Schedule 1 Nam Tai Electronics, Inc. Statements of Changes in Shareholders Equity and Comprehensive Income
    
    
    F-32Schedule 1 Nam Tai Electronics, Inc. Statements of Cash Flows
    
    
    F-33Schedule 1 Nam Tai Electronics, Inc. Note to Schedule 1
    
    
    F-34
  76




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
        
 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 31,2008
    
    2009
    
    2010Net sales  third parties
    
    $
    622,852
    
    
    $
    408,137
    
    
    $
    534,420Cost of sales
    
    
    (552,174
    )
    
    
    (367,817
    )
    
    
    (483,126
    )Gross profit
    
    
    70,678
    
    
    
    40,320
    
    
    
    51,294General and administrative expenses(1)(2)
    
    
    (29,112
    )
    
    
    (28,393
    )
    
    
    (25,232
    )Selling expenses(1)
    
    
    (6,945
    )
    
    
    (5,266
    )
    
    
    (5,504
    )Research and development expenses
    
    
    (10,890
    )
    
    
    (6,273
    )
    
    
    (5,757
    )Impairment loss on goodwill
    
    
    (17,345
    )
    
    
    
    
    
    
    Total operating expenses
    
    
    (64,292
    )
    
    
    (39,932
    )
    
    
    (36,493
    )Income from operations
    
    
    6,386
    
    
    
    388
    
    
    
    14,801Other income (expenses), net
    
    
    6,428
    
    
    
    (256
    )
    
    
    3,972Gain on sales of subsidiaries shares
    
    
    20,206
    
    
    
    
    
    
    
    Interest income
    
    
    6,282
    
    
    
    818
    
    
    
    1,484Interest expense
    
    
    (356
    )
    
    
    (202
    )
    
    
    Income before income taxes
    
    
    38,946
    
    
    
    748
    
    
    
    20,257Income taxes(3)
    
    
    (2,877
    )
    
    
    (1,283
    )
    
    
    (5,251
    )Consolidated net income (loss)
    
    
    36,069
    
    
    
    (535
    )
    
    
    15,006Net (income) loss attributable to noncontrolling interests
    
    
    (5,434
    )
    
    
    2,187
    
    
    
    Net income attributable to Nam Tai(4)shareholders
    
    $
    30,635
    
    
    $
    1,652
    
    
    $
    15,006Basic earnings per share
    
    $
    0.68
    
    
    $
    0.04
    
    
    $
    0.33Diluted earnings per share
    
    $
    0.68
    
    
    $
    0.04
    
    
    $
    0.33
 
 (1)
    
    The 2009 and 2010 presentations show general and administrative expenses and selling expenses
as separate line items, whereas the Companys consolidated statement of income for 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 2008 have been presented separately to conform to the 2009 and
2010 presentations.(2)
    
    General and administrative expenses include employee severance benefits of $5,058 and $656
for the years ended December 31, 2009 and 2010 respectively.(3)
    
    Income tax expenses for the year ended December 31, 2010 included a deferred tax credit of
$2,600 arising from tax losses of Wuxi FPC business, whereas the actual utilization of
such deferred tax asset depends on future profit streams of that business.(4)
    
    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 31,2009
    
    2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    182,722
    
    
    $
    228,067Fixed deposits maturing over three months
    
    
    12,903
    
    
    
    Accounts and
notes receivable, less allowance for doubtful accounts of $59 and $13 at December 31, 2009 and 2010,
respectively
    
    
    57,911
    
    
    
    74,176Inventories
    
    
    16,054
    
    
    
    29,058Prepaid expenses and other receivables
    
    
    3,079
    
    
    
    5,719Deferred tax assets  current
    
    
    1,460
    
    
    
    376Income tax recoverable
    
    
    
    
    
    
    105Total current assets
    
    
    274,129
    
    
    
    337,501Property, plant and equipment, net
    
    
    108,110
    
    
    
    88,895Land use rights
    
    
    13,296
    
    
    
    12,264Deposits for property, plant and equipment
    
    
    32
    
    
    
    477Goodwill
    
    
    2,951
    
    
    
    2,951Deferred tax assets  non-current
    
    
    4,486
    
    
    
    8,423Other assets
    
    
    920
    
    
    
    269Total assets
    
    $
    403,924
    
    
    $
    450,780LIABILITIES AND EQUITYCurrent liabilities:Notes payable
    
    $
    691
    
    
    $
    Accounts payable
    
    
    58,667
    
    
    
    84,590Accrued expenses and other payables
    
    
    16,397
    
    
    
    17,484Dividend payable
    
    
    
    
    
    
    8,961Income taxes payable
    
    
    656
    
    
    
    4,232Total current liabilities
    
    
    76,411
    
    
    
    115,267Deferred tax liability  non-current
    
    
    1,103
    
    
    
    1,379Total liabilities
    
    
    77,514
    
    
    
    116,646Equity:Common shares ($0.01 par value  authorized 200,000,000 shares,
issued and outstanding 44,803,735 shares as at
December 31, 2009 and 2010
    
    
    448
    
    
    
    448Additional paid-in capital (1)
    
    
    285,264
    
    
    
    286,943Retained earnings
    
    
    40,706
    
    
    
    46,751Accumulated other comprehensive loss
    
    
    (8
    )
    
    
    (8
    )Total Nam Tai shareholders equity
    
    
    326,410
    
    
    
    334,134Total equity
    
    
    326,410
    
    
    
    334,134Total liabilities and equity
    
    $
    403,924
    
    
    $
    450,780
  
 (1)
    
    Additional paid-in capital includes a $1,584 compensation obligation payable by the Company
at the end of three years continuous services to its CFO, which obligation was terminated in
October 2010. The amount so accrued was reclassified to additional paid-in capital in
accordance with the guidance under Staff Accounting Bulletin (SAB) Topics 1B.1 and 5T,
Financial Accounting Standard Board (FASB) Accounting Standards Codification (ASC)
718-10-15-4.  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
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    
    
    ConsolidatedShares
    
    
    Shares
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Nam Tai
    
    
    Noncontrolling
    
    
    
    
    
    
    Comprehensive IncomeOutstanding
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    Shareholders Equity
    
    
    Interests
    
    
    Total Equity
    
    
    (Loss)Balance at January 1, 2008
    
    
    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
    )Purchase of subsidiary shares
from noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (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
    
    
    $
    
    
    
    $
    326,410Equity-settled share-based payment
    
    
    
    
    
    
    
    
    
    
    95
    
    
    
    
    
    
    
    
    
    
    
    95
    
    
    
    
    
    
    
    95Deemed contribution of services
    
    
    
    
    
    
    
    
    
    
    1,584
    
    
    
    
    
    
    
    
    
    
    
    1,584
    
    
    
    
    
    
    
    1,584Consolidated net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,006
    
    
    
    
    
    
    
    15,006
    
    
    
    
    
    
    
    15,006
    
    
    $
    15,006Consolidated comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    15,006Cash dividends ($0.20 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,961
    )
    
    
    
    
    
    
    (8,961
    )
    
    
    
    
    
    
    (8,961
    )Balance at December 31, 2010
    
    
    44,803,735
    
    
    $
    448
    
    
    $
    286,943
    
    
    $
    46,751
    
    
    $
    (8
    )
    
    $
    334,134
    
    
    $
    
    
    
    $
    334,134
  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 31,2008
    
    2009
    
    2010Cash flows from operating activities:Consolidated net income (loss)
    
    $
    36,069
    
    
    $
    (535
    )
    
    $
    15,006Adjustments to reconcile consolidated net income (loss) to net cash provided by
operating activities:Depreciation and amortization
    
    
    22,208
    
    
    
    23,116
    
    
    
    24,468Impairment loss on goodwill
    
    
    17,345
    
    
    
    
    
    
    
    (Gain) loss on disposal of property, plant and equipment and land use rights
    
    
    (13
    )
    
    
    1,248
    
    
    
    (1,218
    )Gain on sale of a subsidiarys shares
- J.I.C. Technology Company Limited (JIC Technology)
    
    
    (20,206
    )
    
    
    
    
    
    
    Share-based compensation expenses
    
    
    1,228
    
    
    
    67
    
    
    
    95Dividend withheld
    
    
    (305
    )
    
    
    
    
    
    
    Unrealized exchange gain
    
    
    (4,757
    )
    
    
    (39
    )
    
    
    (2,235
    )Deferred income taxes
    
    
    (793
    )
    
    
    (804
    )
    
    
    (2,577
    )Changes in current assets and liabilities:(Increase) decrease in accounts and notes receivable
    
    
    (8,499
    )
    
    
    46,239
    
    
    
    (16,265
    )Decrease (increase) in inventories
    
    
    5,056
    
    
    
    11,246
    
    
    
    (13,004
    )Decrease (increase) in prepaid expenses and other receivables
    
    
    1,574
    
    
    
    1,069
    
    
    
    (2,434
    )Decrease (increase) in income taxes recoverable
    
    
    5,439
    
    
    
    
    
    
    
    (105
    )(Decrease) increase in notes payable
    
    
    (4,580
    )
    
    
    691
    
    
    
    (691
    )(Decrease) increase in accounts payable
    
    
    (9,201
    )
    
    
    (39,458
    )
    
    
    25,923(Decrease) increase in accrued expenses and other payables
    
    
    (4,233
    )
    
    
    (4,132
    )
    
    
    4,354Increase (decrease) in income taxes payable
    
    
    459
    
    
    
    (205
    )
    
    
    3,576Total adjustments
    
    
    722
    
    
    
    39,038
    
    
    
    19,887Net cash provided by operating activities
    
    $
    36,791
    
    
    $
    38,503
    
    
    $
    34,893
 F-6




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##### Table of Contents



NAM TAI ELECTRONICS, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands of US dollars)
 Year ended December 31,2008
    
    
    2009
    
    
    2010Cash flows from investing activities:Purchase of property, plant and equipment
    
    $
    (27,407
    )
    
    $
    (30,420
    )
    
    $
    (6,295
    )(Increase) decrease in deposits for property, plant and equipment
    
    
    (2,606
    )
    
    
    2,905
    
    
    
    (445
    )(Increase) decrease in entrusted loan receivable
    
    
    (8,166
    )
    
    
    8,199
    
    
    
    Increase in prepayment for land use rights
    
    
    (663
    )
    
    
    
    
    
    
    Decrease in other assets
    
    
    299
    
    
    
    
    
    
    
    Net cash inflow from disposal of a subsidiary  JIC Technology
    
    
    6,671
    
    
    
    
    
    
    
    Acquisition of additional shares in subsidiaries
    
    
    (2,906
    )
    
    
    (43,434
    )
    
    
    Proceeds from disposal of property, plant and equipment
    
    
    55
    
    
    
    872
    
    
    
    2,054(Increase) decrease in fixed deposits maturing over three months
    
    
    
    
    
    
    (12,903
    )
    
    
    12,903Net cash (used in) provided by investing activities
    
    $
    (34,723
    )
    
    $
    (74,781
    )
    
    $
    8,217Cash flows from financing activities:Cash dividends paid
    
    $
    (47,675
    )
    
    $
    (9,857
    )
    
    $
    Repayment of bank loans
    
    
    (2,648
    )
    
    
    
    
    
    
    Payment on repurchase of share options
    
    
    (110
    )
    
    
    
    
    
    
    Proceeds from (repayment of) entrusted loan
    
    
    8,166
    
    
    
    (8,199
    )
    
    
    Net cash used in financing activities
    
    $
    (42,267
    )
    
    $
    (18,056
    )
    
    $
    Net (decrease) increase in cash and cash equivalents
    
    
    (40,199
    )
    
    
    (54,334
    )
    
    
    43,110Cash and cash equivalents at beginning of year
    
    
    272,459
    
    
    
    237,017
    
    
    
    182,722Effect of exchange rate changes on cash and cash equivalents
    
    
    4,757
    
    
    
    39
    
    
    
    2,235Cash and cash equivalents at end of year
    
    $
    237,017
    
    
    $
    182,722
    
    
    $
    228,067Supplemental schedule of cash flow information:Interest paid
    
    $
    356
    
    
    $
    202
    
    
    $
    Income taxes (received) paid, net
    
    
    (2,497
    )
    
    
    2,290
    
    
    
    4,428Non-cash investing activities:Increase (decrease) in construction cost funded through
accrued expenses and other payables
    
    $
    8,547
    
    
    $
    (5,438
    )
    
    $
    (1,683
    )Non-cash financing activities:Additional paid-in capital on compensation for loss of office
    
    $
    
    
    
    $
    
    
    
    $
    1,584
 F-7




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##### Table of Contents



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) modules, LCD panels,
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. 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.
 During 2008 and 2009, the Company operated primarily in three reportable segments consisting of telecommunication components
assembly (TCA), consumer electronics and communication products
(CECP), and LCD products (LCDP). In 2010, pursuant
to the merging of the Companys two PRC subsidiaries represented
by LCDP and TCA segments into one Shenzhen subsidiary
in 2010, the chief operating decision maker
reviews the segment results by two business segments (TCA and CECP) when making
decisions about allocating resources and
assessing performance.  The change in presentation of segment
reporting was due to the following:
 
    
    Most of the LCDP business has been mainly LCD modules assembling for telecommunication products in 2010, which is
similar to the business operated by TCA.  In view of the similarity of the products, we have merged the LCDP segment into
the TCA segment;
    
    After the merger, all the TCA business is ran by one management team;
    
    We discontinued our CECP production for bluetooth headsets and calculators with two major box-built customers in the
fourth quarter 2010, and that quarter will be the last quarter for the camera products made for the remaining major customer
be classified under CECP as management has decided to reclassify this business to TCA to reflect its component assembly
nature in 2011;
    
    In 2010, the Flexible Printed Circuit Board (FPCB) business was too insignificant to be classified as one business
segment. In addition, FPCB is regarded as WIP (work in progress) for internal use by the Company, i.e. it is manufactured
for a more value-adding process, FPC assembling.
 The segment information in 2008 and 2009 have been restated
in order to conform with the change in presentation of segment
reporting in 2010 in accordance with FASB ASC 280-10-50-34.  The results of the former LCDP segment were included in the TCA
segment in 2008 and 2009.
 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.
 F-8




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##### Table of Contents



2.
    
    Summary of Significant Accounting Policies  continued
 (c)
    
    Allowance for doubtful accountsAccounts and notes receivable balance is recorded net of allowances for amounts not
expected to be collected from customers. Because the accounts and notes 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.(d)
    
    InventoriesInventories are stated at the lower of cost or market value. Cost is determined on
the first-in, first-out basis. The standard cost of work-in-progress
and finished goods comprises direct materials, labor and
manufacturing overheads. 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 (excluding LCDP production) 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 production,  due to the
nature of the business, the 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.(e)
    
    Property, plant and equipment and land use rightsProperty, plant and equipment and land use rights 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, 2008, 2009 and 2010. 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 rights are included in the consolidated statement of 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 rights in the consolidated balance
sheet. 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 estimation 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:
 F-9




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##### Table of Contents



2.
    
    Summary of Significant Accounting Policies  continued
 (e)
    
    Property, plant and equipment and land use rights - continued
 Classification
    
    Prior to August 1, 2009
    
    After August 1, 2009Land use rights
    
    50 years
    
    50 yearsBuildings
    
    20 to 50 years
    
    20 yearsMachinery and equipment
    
    4 to12 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 in 2009 by $2,308, $1,643, $0.04 and $0.04,
respectively.(f)
    
    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. For the years 2008 and 2009, the Company operated in three reporting
units, which are its reportable segments of CECP, TCA and LCDP. For the year 2010, the
Company operated in two reporting units, which are its reportable segments of TCA and CECP. If business conditions or
other factors cause the profitability and cash flows 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 FASB ASC 350-20
Goodwill. 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.Impairment loss on goodwill on the former LCDP reporting unit of $17,345, as fully described
in note 5 was identified and recognized in 2008. No impairment loss on goodwill was
recognized in 2009 and 2010.(g)
    
    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 FASB ASC 360 Property, Plant and Equipment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 are 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.
 F-10




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##### Table of Contents



2.
    
    Summary of Significant Accounting Policies  continued
 (g)
    
    Impairment or disposal of long-lived assets  continued
 Long-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 our shares first dropped to a level where, based on the daily closing
price of our shares from October 22, 2008 to December 31, 2008, our market
capitalization was less than our 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 our stock price reflected an
aberration or a sustained decline, in accordance with  FASB ASC 360 Property, Plant and
Equipment, we reviewed the Companys 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 our resulting
market capitalization throughout 2009 at a level below our recorded book value at December 31,
2009, the Company conducted a similar review of Nam Tais long-lived assets for potential
impairment.In 2010, although the Companys stock price remained below the aggregate book value of its
assets, the continuous improvement of the Companys results closed the gap on the difference.
Management assessed and determined that there were no events or changes in circumstances to
indicate that the carrying amounts of long-lived assets in Nam Tais Shenzhen facilities were not
recoverable and there were no impairment tests conducted with respect to those assets. In view of
the continuous operating losses and negative cash flows in Nam Tais Wuxi facilities, the Company
assessed the impairment of its long-lived assets used in  the Wuxi facilities,
by comparing the undiscounted cash flows with the carrying amounts of the assets. The results
indicated that the carrying amounts of the Companys long-lived
assets at December 31, 2010 were less
than the undiscounted cash flows.
 (h)
    
    Accruals and provisions for loss contingencies
 The 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 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.
 (i)
    
    Revenue recognition
 The 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 $1,357, $369 and $73 for the years ended
December 31, 2008, 2009 and 2010, respectively.
 (j)
    
    Shipping and handling costs
 Shipping 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, 2008, 2009 and 2010, shipping and handling costs
classified as costs of sales were $503, $363 and $323, respectively.
During
the years ended December 31, 2008, 2009 and 2010, shipping and handing costs
classified as selling expenses were $840, $669 and $940, respectively.
 F-11




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##### Table of Contents



2.
    
    Summary of Significant Accounting Policies  continued
 (k)
    
    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.(l)
    
    Advertising expensesThe Company expenses advertising costs as incurred. Advertising expenses were $132,
$36 and nil for the years ended December 31, 2008, 2009 and 2010, respectively.(m)
    
    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.(n)
    
    Income taxesDeferred income taxes are provided using the asset and liability method in accordance
with FASB ASC 740 Income taxes. 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.FASB ASC 740 clarifies 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. Interest and penalties from tax
assessments, if any, are included in income taxes in the consolidated statement of
income.(o)
    
    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 FASB ASC 830 foreign Currency Matters". 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.(p)
    
    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.(q)
    
    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
 (r)
    
    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.(s)
    
    Comprehensive income (loss)Accumulated other comprehensive loss represents principally foreign currency
translation adjustments and is included in the consolidated statement of changes in
equity.(t)
    
    Fair value of financial instrumentsThe Company adopted FASB ASC 820 Fair Value Measurements and Disclosures to measure
its assets and liabilities. The carrying amounts of cash and cash equivalents, fixed
deposits maturing over three months, accounts and notes receivable, other receivables,
notes payable, accrued expenses and accounts payable, other payables, and dividend
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.As of December 31, 2009 and 2010, 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.(u)
    
    Recent changes in accounting standardsIn 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 did not 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 did not 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 did not have a material impact on the
Companys financial position, results of operations and cash flows.In February 2010, the FASB issued ASU No. 2010-09, Subsequent Events (Topic 855),
which requires an SEC filer to evaluate subsequent events through the date that the
financial statements are issued, and removes the requirement to disclose a date in
both issued and revised financial statements. Revised financial statements include
financial statements revised as a result of either correction of an error or
retrospective application of US GAAP. It also clarifies that if the financial
statements have been revised, then an entity that is not an SEC filer should disclose
both the date the financial statements were issued or available to be issued and the
date the revised financial statements were issued or available to be issued. ASU No.
2010-09 is effective for the interim and annual periods ending after June 15, 2010 and
no material impact on Namtais reporting is considered.
 
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2.
    
    Summary of Significant Accounting Policies  continued
 (u)
    
    Recent changes in accounting standards  continuedIn April 2010, the FASB issued ASU No. 2010-13, CompensationStock Compensation
(Topic 718), which provides amendments to Topic 718 to clarify that an employee
share-based payment award with an exercise price denominated in the currency of a
market in which a substantial portion of the entitys equity securities trades should
not be considered to contain a condition that is not a market, performance, or service
condition. Therefore, an entity would not classify such an award as a liability if it
otherwise qualifies as equity. ASU No. 2010-13 is effective for fiscal years, and
interim period within those fiscal years, beginning on or after December 15, 2010. The
adoption of ASU No. 2010-13 is not expected to have any impact on the Companys
financial position, results of operations and cash flows.In December 2010, the FASB issued ASU No. 2010-28, IntangiblesGoodwill and Other
(Topic 350), which modifies Step 1 of the goodwill impairment test for reporting
units with zero or negative carrying amounts. For those reporting units, an entity is
required to perform Step 2 of the goodwill impairment test if it is more likely than
not that a goodwill impairment exists. In determining whether it is more likely than
not that a goodwill impairment exists, an entity should consider whether there are any
adverse qualitative factors indicating that an impairment may exist. ASU No. 2010-28
is effective for fiscal years, and interim period within those fiscal years, beginning
on or after December 15, 2010. The adoption of ASU No. 2010-28 is not expected to have
any impact on the Companys financial position, results of operations and cash flows.In December 2010, the FASB issued ASU No. 2010-29, Business Combinations (Topic
805), which specifies that if a public entity presents comparative financial
statements, the entity should disclose revenue and earnings of the combined entity as
though the business combination(s) that occurred during the current year had occurred
as of the beginning of the comparable prior annual reporting period only. The
amendments in this Update also expand the supplemental pro forma disclosures under
Topic 805 to include a description of the nature and amount of material, nonrecurring
pro forma adjustments directly attributable to the business combination included in
the reported pro forma revenue and earnings. ASU No. 2010-29 is effective for business
combinations for which the acquisition date is after the annual periods ending after
December 15, 2010 and which early adoption is permitted. The Company believes that the
adoption of ASU No. 2010-29 may impact future business combinations.(v)
    
    Noncontrolling interestsThe Company adopted FASB ASC 810-10-45-16Consolidation
Overall  Other Presentation Matter  Noncontrolling Interest in a Subsidiary, which is effective as of the beginning of
an entitys first fiscal year that begins after
December 15, 2008. Accordingly, in 2009, minority
interests have 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 have 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 balances in the consolidated financial statements for the year ended
December 31, 2008.
 3.
    
    Inventories
 Inventories consist of the following:
 At December 31,
    
    2009
    
    
    2010Raw materials
    
    $
    11,401
    
    
    $
    19,372Work-in-progress
    
    
    1,879
    
    
    
    4,022Finished goods
    
    
    2,774
    
    
    
    5,664$
    16,054
    
    
    $
    29,058
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4.
    
    Property, Plant and Equipment, net
 Property, plant and equipment, net consist of the following:
 At December 31,
    
    2009
    
    
    2010At cost:Buildings
    
    $
    89,335
    
    
    $
    89,361Machinery and equipment
    
    
    127,369
    
    
    
    128,647Leasehold improvements
    
    
    29,239
    
    
    
    30,586Furniture and fixtures
    
    
    2,771
    
    
    
    4,469Automobiles
    
    
    1,107
    
    
    
    1,397Tools and molds
    
    
    235
    
    
    
    283Total
    
    
    250,056
    
    
    
    254,743Less: accumulated depreciation
    
    
    (146,751
    )
    
    
    (166,642
    )103,305
    
    
    
    88,101Construction in progress
    
    
    4,805
    
    
    
    794Net book value
    
    $
    108,110
    
    
    $
    88,895
 Depreciation expenses were $21,901, $22,819 and $23,734 for the years ended December 31,
2008, 2009 and 2010 respectively.
 5.
    
    Goodwill
 A summary of the changes in the carrying value of goodwill, by reporting unit, is as follows:
 CECPreporting unitBalance at December 31, 2009 and 2010
    
    $
    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 former 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 former LCDP reporting unit. The fair value of
the former LCDP reporting unit was estimated using a discounted cash flow methodology. Having
determined that the goodwill of the former 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 former 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.In 2010, the fair value of the CECP reporting unit was determined using a discounted cash flow
methodology, based on a discount rate of 8.6% and expected future cash flows. The expected future
cash flows were based on a five-year plan 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 2010 and concluded that the fair value of the CECP reporting unit exceeded
its carrying value as of December 31, 2010. Therefore, no impairment loss was recognized in
2010.
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6.
    
    Investments in Subsidiaries
 Percentage of Ownership asPlace of
    
    Principal
    
    at December 31,Subsidiaries
    
    Incorporation
    
    activity
    
    2009
    
    2010Consolidated principal subsidiaries:NTEEP
    
    Cayman Islands
    
    Investment holding
    
    
    100
    %
    
    
    100
    %Nam Tai Holdings Limited
    
    BVI
    
    Investment holding
    
    
    100
    %
    
    
    100
    %Nam Tai Investment Limited
    
    Hong Kong
    
    Investment holding
    
    
    100
    %
    
    
    100
    %Nam Tai Group Management Limited (NTGM)
    
    Hong Kong
    
    Inactive
    
    
    100
    %
    
    
    100
    %Nam Tai Telecom (Hong Kong) Company Limited
    
    Hong Kong
    
    Inactive
    
    
    100
    %
    
    
    100
    %Nam Tai Trading Company Limited (NTTC)
    
    Hong Kong
    
    Inactive
    
    
    100
    %
    
    
    100
    %Nam Tai Investments Consultant (Macao Commercial Offshore) Company Ltd.
    
    Macao
    
    Inactive
    
    
    100
    %
    
    
    
    (1)Zastron (Macao Commercial Offshore) Company Limited
    
    Macao
    
    Inactive
    
    
    100
    %
    
    
    
    (1)Namtai Electronic (Shenzhen) Co., Ltd. (Namtai Shenzhen)
    
    PRC
    
    Manufacturing and trading
    
    
    100
    %
    
    
    100
    %Jetup Electronic (Shenzhen) Co., Ltd. (Jetup)
    
    PRC
    
    Manufacturing and trading
    
    
    100
    %
    
    
    
    (2)Zastron Electronic (Shenzhen) Co. Ltd. (Zastron Shenzhen)
    
    PRC
    
    Manufacturing and trading
    
    
    100
    %
    
    
    100
    %Wuxi Zastron Precision-Flex Co., Ltd. (Wuxi Zastron Flex)
    
    PRC
    
    Manufacturing and trading
    
    
    100
    %
    
    
    100
    %Wuxi Zastron Precision-Tech Co., Ltd. (Wuxi Zastron Tech)
    
    PRC
    
    Manufacturing and trading
    
    
    100
    %
    
    
    
    (3)Namtai Japan Company Limited
    
    Japan
    
    Provision of sales co-ordination and marketing services
    
    
    100
    %
    
    
    
    (1)
 
 (1)
    
    De-registered during the year ended December 31, 2010.(2)
    
    Merged with Zastron Shenzhen during the year ended December 31, 2010.(3)
    
    Merged with Wuxi Zastron Flex during the year ended December 31, 2010. Significant Transactions
 (i)
    
    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 was 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.(ii)
    
    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.(iii)
    
    In 2009, the Company acquired all of the outstanding
221,455,118 ordinary shares of NTEEP it did not own 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.
 Retained Earnings and Reserves
 The 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 $270,548 and $294,691 as of December 31, 2009 and
2010, 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,
    
    2009
    
    
    2010Accrued salaries
    
    $
    3,258
    
    
    $
    4,744Accrued bonus
    
    
    844
    
    
    
    4,561Accrued tooling and equipment charges
    
    
    2,112
    
    
    
    553Accrued professional fees
    
    
    1,826
    
    
    
    1,709Construction payable
    
    
    2,785
    
    
    
    1,102Others
    
    
    5,572
    
    
    
    4,815$
    16,397
    
    
    $
    17,484
 8.
    
    Bank Loans and Banking Facilities
 The subsidiaries of the Company have credit facilities with various banks representing notes
payable, trade acceptances, import facilities, revolving loans and overdrafts. At December
31, 2009 and 2010, these facilities totaled $5,129 and $14,130, of which $4,144 and $14,130
were unused at December 31, 2009 and 2010, respectively. The maturity of these facilities is
generally up to 90 days. Interest rates are generally based on the banks usual lending
rates in Hong Kong or the PRC and the credit lines are normally subject to annual review. The
banking facilities are secured by guarantee given by Nam Tai and Namtai Shenzhen.Total banking facilities utilized which are usance bills pending maturity may not agree to
notes payable due to bank having not yet received the bills of goods from vendors as of the
balance sheet date.
 At December 31,
    
    2009
    
    
    2010Usance bills pending maturity
    
    $
    985
    
    
    $
    Total banking facilities utilized
    
    
    985
    
    
    
    Less: Outstanding letters of credit
    
    
    (294
    )
    
    
    Notes payable
    
    $
    691
    
    
    $
    
 The notes payable carried no interest during 2009.
 9.
    
    Equity
 (a)
    
    The Company has only one class of common shares authorized, issued and
outstanding.(b)
    
    Stock OptionsIn 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  continuedIn 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, 2010 is as
follows:
 Weighted
    
    
    Weightedaverage
    
    
    average fairNumber of
    
    
    exercise
    
    
    value peroptions
    
    
    price
    
    
    optionOutstanding and exercisable at January 1, 2008
    
    
    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
    
    
    $
    0.89Granted
    
    
    60,000
    
    
    $
    4.45
    
    
    $
    1.58Surrendered
    
    
    (15,000
    )
    
    $
    4.41
    
    
    $
    0.89Outstanding and exercisable at December 31, 2010
    
    
    120,000
    
    
    $
    4.43
    
    
    $
    1.24
 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 2008, 2009 and 2010 are as follows:
 Number of
    
    
    
    Exerciseoptions granted
    
    Vesting period
    
    price
    
    Exercisable periodIn 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 (note 3)In 201060,000
    
    100% vested at date of grant
    
    $
    4.45
    
    
    June 3, 2010 to June 2, 2013
 Notes:1.
    
    These options were repurchased during 2008.2.
    
    These options were canceled during 2008.3.
    
    15,000 of these stock options were surrendered during 2010.
 
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9.
    
    Equity  continued
 (b)
    
    Stock Options  continuedAs of December 31, 2010, there were no non-vested stock options. The total amount of
recognized compensation expense in 2008, 2009 and 2010 was $955, $67 and $95,
respectively.The following summarizes information about stock options outstanding at December 31, 2010.
120,000 stock options are exercisable as of December 31, 2010.
 Weighted averageNumber
    
    remaining contractualWeighted average exercise price
    
    of options
    
    life in months$4.43
    
    
    120,000
    
    
    
    23.1
 The weighted average remaining contractual life of the stock options outstanding at
December 31, 2008, 2009 and 2010 was approximately 5, 29 and 23 months, respectively. The
weighted average fair value of options granted during 2008, 2009 and 2010 was $1.34, $0.89
and $1.58, respectively, using the Black-Scholes option-pricing model based on the
following assumptions:
 Year ended December 31,
    
    2008
    
    
    2009
    
    
    2010Risk-free interest rate
    
    2.08% to 2.73%
    
    
    1.50
    %
    
    
    1.25
    %Expected life
    
    3 years
    
    3 years
    
    
    3 yearsExpected volatility
    
    35.49% to 38.00%
    
    
    52.34
    %
    
    
    51.23
    %Expected dividend yield
    
    
    8.16%
    
    
    
    9.98
    %
    
    
    
 (c)
    
    Share Buy  backNo shares were repurchased during the years ended December 31, 2008, 2009 and 2010.(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
  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
  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
 Weightedaverage number
    
    
    Per shareYear ended December 31, 2010
    
    Income
    
    
    of shares
    
    
    amountBasic earnings per share
    
    $
    15,006
    
    
    
    44,803,735
    
    
    $
    0.33Effect of dilutive securities  Stock options
    
    
    
    
    
    
    18,025
    
    
    
    Diluted earnings per share
    
    $
    15,006
    
    
    
    44,821,760
    
    
    $
    0.33
 11. Staff Retirement Plans
     F-20




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##### Table of Contents



12. Income Taxes
  Year ended December 31,
    
    2008
    
    
    2009
    
    
    2010PRC, excluding Hong Kong and Macao
    
    $
    3,055
    
    
    $
    4,629
    
    
    $
    25,405Hong Kong, Macao and other jurisdictions
    
    
    35,891
    
    
    
    (3,881
    )
    
    
    (5,148
    )$
    38,946
    
    
    $
    748
    
    
    $
    20,257
         F-21




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##### Table of Contents



12.
Income Taxes-continued
 Tax Dispute with Hong Kong Inland Revenue Department
  NTTC
     NTGM
   NTT
   F-22




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##### Table of Contents



12. Income Taxes-continued
 (4)
    
    Expected Dispositions of Tax Disputes with Inactive or Dormant
Subsidiaries
   (5)
    
    Notices of Alleged Personal Liability for Additional Taxes Against Former
Directors and Officers for Signing NTTCs Tax Returns
         Year ended December 31,
    
    2008
    
    
    2009
    
    
    2010Current tax
    
    $
    (3,670
    )
    
    $
    (2,087
    )
    
    $
    (7,828
    )Deferred tax
    
    
    793
    
    
    
    804
    
    
    
    2,577$
    (2,877
    )
    
    $
    (1,283
    )
    
    $
    (5,251
    )
 F-23




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##### Table of Contents



12. Income Taxes-continued
  December 31,
    
    2009
    
    
    2010Net operating losses
    
    $
    2,634
    
    
    $
    3,585Obsolete inventories
    
    
    171
    
    
    
    23Allowance for doubtful accounts
    
    
    47
    
    
    
    3Property, plant and equipment
    
    
    4,486
    
    
    
    5,832Pre-operating expenses
    
    
    
    
    
    
    272Employee severance benefits
    
    
    196
    
    
    
    Total deferred tax assets
    
    
    7,534
    
    
    
    9,715Less: valuation allowance
    
    
    (1,588
    )
    
    
    (916
    )Deferred tax assets
    
    
    5,946
    
    
    
    8,799Deferred tax liability arising from withholding tax
on undistributed earnings
of PRC subsidiaries
    
    
    (1,103
    )
    
    
    (1,379
    )Net deferred tax
    
    $
    4,843
    
    
    $
    7,420
  December 31,
    
    2008
    
    
    2009
    
    
    2010At beginning of the year
    
    $
    1,040
    
    
    $
    1,831
    
    
    $
    1,588Current year addition (reduction)
    
    
    1,227
    
    
    
    (276
    )
    
    
    (672
    )Disposal of a subsidiary
    
    
    (399
    )
    
    
    
    
    
    
    Change in tax law
    
    
    (37
    )
    
    
    33
    
    
    
    At end of the year
    
    $
    1,831
    
    
    $
    1,588
    
    
    $
    916
    Year ended December 31,
    
    2008
    
    
    2009
    
    
    2010Income before income taxes
    
    $
    38,946
    
    
    $
    748
    
    
    $
    20,257PRC tax rate
    
    
    18
    %
    
    
    20
    %
    
    
    22
    %Income tax expense at PRC tax rate on income before income tax
    
    $
    (7,010
    )
    
    $
    (150
    )
    
    $
    (4,457
    )Effect of difference between Hong Kong and PRC tax rates applied to Hong Kong income
    
    
    (71
    )
    
    
    (485
    )
    
    
    (134
    )Effect of change in tax law
    
    
    330
    
    
    
    364
    
    
    
    134Change in valuation allowance
    
    
    (1,227
    )
    
    
    276
    
    
    
    672Deferred tax liability on withholding tax on undistributed profits of PRC subsidiaries
    
    
    (740
    )
    
    
    (363
    )
    
    
    (276
    )Effect of income not taxable for tax purpose
    
    
    7,307
    
    
    
    
    
    
    
    Tax benefit (expense) arising from items which are not assessable (deductible) for tax purposes:Exempted interest income
    
    
    57
    
    
    
    
    
    
    
    Exempted exchange gain
    
    
    1,000
    
    
    
    
    
    
    
    Non-deductible legal and professional fees
    
    
    (146
    )
    
    
    
    
    
    
    Non-deductible impairment loss on goodwill
    
    
    (3,122
    )
    
    
    
    
    
    
    Non-deductible and non-taxable items
    
    
    655
    
    
    
    (766
    )
    
    
    (777
    )Under-provision of income tax expense in prior years
    
    
    
    
    
    
    (46
    )
    
    
    (69
    )Others
    
    
    90
    
    
    
    (113
    )
    
    
    (344
    )Income tax expense
    
    $
    (2,877
    )
    
    $
    (1,283
    )
    
    $
    (5,251
    )
  F-24




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##### Table of Contents



13. Financial Instruments
    14. Commitments and Contingencies
 (a) Commitments
  Payments (in thousands) due by periodContractual Obligation
    
    Total
    
    
    2011
    
    
    2012
    
    
    2013Operating
leases(1)
    
    $
    1,016
    
    
    $
    1,016
    
    
    $
    

(2)
    
    $
    Capital
commitments(3)
    
    
    4,923
    
    
    
    4,923
    
    
    
    
    
    
    
    Total
    
    $
    5,939
    
    
    $
    5,939
    
    
    $
    
    
    
    $
    
 
 
 
 (b) Significant legal proceedings
  15. Segment Information
   
    Most of the LCDP business has been mainly LCD modules assembling for telecommunication products in 2010, which is similar to the business operated by TCA.
In view of the similarity of the products, we have merged the LCDP segment into the TCA segment;
    After the merger, all the TCA business is ran by one management team;
    We discontinued our CECP production for bluetooth headsets and calculators with two major box-built customers in the fourth quarter 2010, and that quarter will be the last quarter for the camera products made for the remaining major customer be classified under CECP as
management has decided to reclassify this business to TCA to reflect its component assembly nature in 2011;
    In 2010, the Flexible Printed Circuit Board (FPCB) business was too insignificant to be classified as one business segment. In addition, FPCB is regarded as WIP (work-in-progress)
for internal use by the Company, i.e. it is manufactured for a more value-adding process, FPC assembling.
  F-25




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##### Table of Contents



15. Segment Information-continued
 Year
ended December 31, 2008
 TCA
    
    CECP
    
    Corporate
    
    TotalNet sales  third parties
    
    $
    351,487
    
    
    $
    271,365
    
    
    $
    
    
    
    $
    622,852Cost of sales
    
    
    (330,772
    )
    
    
    (221,402
    )
    
    
    
    
    
    
    (552,174
    )Gross profit
    
    
    20,715
    
    
    
    49,963
    
    
    
    
    
    
    
    70,678General and administrative expenses *
    
    
    (14,583
    )
    
    
    (10,813
    )
    
    
    (3,716
    )
    
    
    (29,112
    )Selling expenses *
    
    
    (3,210
    )
    
    
    (3,735
    )
    
    
    
    
    
    
    (6,945
    )Research and development expenses
    
    
    (5,394
    )
    
    
    (5,496
    )
    
    
    
    
    
    
    (10,890
    )Impairment loss on goodwill
    
    
    (17,345
    )
    
    
    
    
    
    
    
    
    
    
    (17,345
    )Other income, net
    
    
    666
    
    
    
    4,429
    
    
    
    1,333
    
    
    
    6,428Gain on sales of subsidiaries shares
    
    
    
    
    
    
    
    
    
    
    20,206
    
    
    
    20,206Interest income
    
    
    964
    
    
    
    2,801
    
    
    
    2,517
    
    
    
    6,282Interest expense
    
    
    (356
    )
    
    
    
    
    
    
    
    
    
    
    (356
    )(Loss) income before income taxes
    
    
    (18,543
    )
    
    
    37,149
    
    
    
    20,340
    
    
    
    38,946Income taxes
    
    
    1,401
    
    
    
    (4,278
    )
    
    
    
    
    
    
    (2,877
    )Consolidated net (loss) income
    
    
    (17,142
    )
    
    
    32,871
    
    
    
    20,340
    
    
    
    36,069Net loss (income) attributable to
noncontrolling interests
    
    
    78
    
    
    
    (5,512
    )
    
    
    
    
    
    
    (5,434
    )Net (loss) income attributable to
Nam Tai shareholders
    
    $
    (17,064
    )
    
    $
    27,359
    
    
    $
    20,340
    
    
    $
    30,635Year
ended December 31, 2009TCA
    
    CECP
    
    Corporate
    
    TotalNet sales  third parties
    
    $
    292,074
    
    
    $
    116,063
    
    
    $
    
    
    
    $
    408,137Cost of sales
    
    
    (273,011
    )
    
    
    (94,806
    )
    
    
    
    
    
    
    (367,817
    )Gross profit
    
    
    19,063
    
    
    
    21,257
    
    
    
    
    
    
    
    40,320General and administrative expenses
    
    
    (17,085
    )
    
    
    (7,155
    )
    
    
    (4,153
    )
    
    
    (28,393
    )Selling expenses
    
    
    (3,248
    )
    
    
    (2,018
    )
    
    
    
    
    
    
    (5,266
    )Research and development expenses
    
    
    (2,987
    )
    
    
    (3,286
    )
    
    
    
    
    
    
    (6,273
    )Other income (expenses), net
    
    
    262
    
    
    
    78
    
    
    
    (596
    )
    
    
    (256
    )Interest income
    
    
    78
    
    
    
    476
    
    
    
    264
    
    
    
    818Interest expense
    
    
    (202
    )
    
    
    
    
    
    
    
    
    
    
    (202
    )(Loss) income before income taxes
    
    
    (4,119
    )
    
    
    9,352
    
    
    
    (4,485
    )
    
    
    748Income taxes
    
    
    1,400
    
    
    
    (2,683
    )
    
    
    
    
    
    
    (1,283
    )Consolidated net (loss) income
    
    
    (2,719
    )
    
    
    6,669
    
    
    
    (4,485
    )
    
    
    (535
    )Net loss attributable to noncontrolling interests
    
    
    2,146
    
    
    
    41
    
    
    
    
    
    
    
    2,187Net (loss) income attributable to Nam Tai
shareholders
    
    $
    (573
    )
    
    $
    6,710
    
    
    $
    (4,485
    )
    
    $
    1,652
 F-26




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##### Table of Contents



15.
 Segment Information  continued
 Year ended December 31, 2010
 TCA
    
    CECP
    
    Corporate
    
    TotalNet sales  third parties
    
    $
    401,259
    
    
    $
    133,161
    
    
    $
    
    
    
    $
    534,420Cost of sales
    
    
    (375,250
    )
    
    
    (107,876
    )
    
    
    
    
    
    
    (483,126
    )Gross profit
    
    
    26,009
    
    
    
    25,285
    
    
    
    
    
    
    
    51,294General and administrative expenses
    
    
    (12,143
    )
    
    
    (6,074
    )
    
    
    (7,015
    )
    
    
    (25,232
    )Selling expenses
    
    
    (4,346
    )
    
    
    (1,158
    )
    
    
    
    
    
    
    (5,504
    )Research and development expenses
    
    
    (3,558
    )
    
    
    (2,199
    )
    
    
    
    
    
    
    (5,757
    )Other income, net
    
    
    2,080
    
    
    
    1,064
    
    
    
    828
    
    
    
    3,972Interest income
    
    
    303
    
    
    
    574
    
    
    
    607
    
    
    
    1,484Income (loss) before income taxes
    
    
    8,345
    
    
    
    17,492
    
    
    
    (5,580
    )
    
    
    20,257Income taxes
    
    
    (1,728
    )
    
    
    (3,523
    )
    
    
    
    
    
    
    (5,251
    )Consolidated net income (loss)
    
    
    6,617
    
    
    
    13,969
    
    
    
    (5,580
    )
    
    
    15,006Net income (loss) attributable to
Nam Tai shareholders
    
    $
    6,617
    
    
    $
    13,969
    
    
    $
    (5,580
    )
    
    $
    15,006
 
 *
    
    The 2009 and 2010 presentations show general and administrative expenses and selling
expenses as separate line items, whereas the Companys consolidated statement of income for 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 2008 have been presented separately in the segment information to
conform to the 2009 and 2010 presentations.
 Year
ended December 31, 2008
 TCA
    
    CECP
    
    Corporate
    
    TotalDepreciation and amortization
    
    $
    15,358
    
    
    $
    6,846
    
    
    $
    4
    
    
    $
    22,208Capital expenditures
    
    $
    43,541
    
    
    $
    1,894
    
    
    $
    
    
    
    $
    45,435Total assets
    
    $
    207,493
    
    
    $
    189,889
    
    
    $
    116,679
    
    
    $
    514,061
 Year
ended December 31, 2009
 TCA
    
    CECP
    
    Corporate
    
    TotalDepreciation and amortization
    
    $
    16,597
    
    
    $
    6,516
    
    
    $
    3
    
    
    $
    23,116Capital expenditures
    
    $
    24,806
    
    
    $
    176
    
    
    $
    
    
    
    $
    24,982Total assets
    
    $
    183,887
    
    
    $
    112,058
    
    
    $
    107,979
    
    
    $
    403,924
 Year ended December 31, 2010
 TCA
    
    CECP
    
    Corporate
    
    TotalDepreciation and amortization
    
    $
    18,134
    
    
    $
    5,839
    
    
    $
    495
    
    
    $
    24,468Capital expenditures
    
    $
    4,409
    
    
    $
    123
    
    
    $
    80
    
    
    $
    4,612Total assets
    
    $
    197,083
    
    
    $
    55,569
    
    
    $
    198,128
    
    
    $
    450,780
  F-27




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##### Table of Contents



15. Segment Information  continued
  Year ended December 31,
    
    2008
    
    2009
    
    2010Product lineTCA
    
    
    56
    %
    
    
    72
    %
    
    
    75
    %CECP
    
    
    44
    %
    
    
    28
    %
    
    
    25
    %100
    %
    
    
    100
    %
    
    
    100
    %
   Year ended December 31,
    
    2008
    
    2009
    
    2010Net sales from operations within:- PRC, excluding Hong Kong and Macao:Unaffiliated customers
    
    $
    622,852
    
    
    $
    408,137
    
    
    $
    534,420Intercompany sales
    
    
    141
    
    
    
    19
    
    
    
    1,222$
    622,993
    
    
    $
    408,156
    
    
    $
    535,642- Intercompany eliminations
    
    
    (141
    )
    
    
    (19
    )
    
    
    (1,222
    )Total net sales
    
    $
    622,852
    
    
    $
    408,137
    
    
    $
    534,420Net income (loss) attributable to Nam Tai shareholders within:- PRC, excluding Hong Kong and Macao
    
    $
    (4,542
    )
    
    $
    5,533
    
    
    $
    20,154- Hong Kong and Macao
    
    
    35,177
    
    
    
    (3,881
    )
    
    
    (5,148
    )Total net income attributable to Nam Tai shareholders
    
    $
    30,635
    
    
    $
    1,652
    
    
    $
    15,006
 Year ended December 31,
    
    2008
    
    2009
    
    2010Net sales to customers by geographical area:- Hong Kong
    
    $
    226,020
    
    
    $
    116,254
    
    
    $
    103,337- Europe
    
    
    136,888
    
    
    
    47,577
    
    
    
    64,587- United States
    
    
    108,150
    
    
    
    41,147
    
    
    
    51,963- PRC (excluding Hong Kong)
    
    
    86,968
    
    
    
    43,300
    
    
    
    16,578- Japan
    
    
    11,623
    
    
    
    140,923
    
    
    
    291,883- North America (excluding United States)
    
    
    15,775
    
    
    
    762
    
    
    
    914- Korea
    
    
    9,411
    
    
    
    1,503
    
    
    
    277- Others
    
    
    28,017
    
    
    
    16,671
    
    
    
    4,881Total net sales
    
    $
    622,852
    
    
    $
    408,137
    
    
    $
    534,420
 F-28




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##### Table of Contents



15. Segment Information  continued
 As of December 31,
    
    2008
    
    
    2009
    
    
    2010Long-lived assets by geographical area:- PRC, excluding Hong Kong and Macao
    
    $
    121,475
    
    
    $
    121,286
    
    
    $
    101,014- Hong Kong and Macao
    
    
    185
    
    
    
    120
    
    
    
    145Total long-lived assets
    
    $
    121,660
    
    
    $
    121,406
    
    
    $
    101,159
   Year ended December 31,
    
    2008
    
    2009
    
    2010A
    
    $
    102,894
    
    
    $
    94,015
    
    
    
    N/AB
    
    
    95,911
    
    
    
    41,559
    
    
    
    94,644C
    
    
    95,508
    
    
    
    72,922
    
    
    
    63,803D
    
    
    65,269
    
    
    
    N/A
    
    
    
    N/AE
    
    
    N/A
    
    
    
    49,770
    
    
    
    131,873F
    
    
    N/A
    
    
    
    N/A
    
    
    
    88,952$
    359,582
    
    
    $
    258,266
    
    
    $
    379,272
 16. Employee Severance Benefits
  2009
    
    
    2010Expenses incurred by segment:TCA
    
    $
    3,360
    
    
    $
    CECP
    
    
    1,698
    
    
    
    656$
    5,058
    
    
    $
    656
 2009
    
    
    2010Provision for employee severance benefits:Balance at January 1
    
    $
    
    
    
    $
    979Provision for the year
    
    
    5,058
    
    
    
    656Payments during the year
    
    
    (4,079
    )
    
    
    (1,560
    )Balance at December 31
    
    $
    979
    
    
    $
    75
 F-29




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##### Table of Contents



SCHEDULE 1
NAM TAI ELECTRONICS, INC.
STATEMENTS OF INCOME
 (In thousands of US dollars)
 Year ended December 31,2008
    
    
    2009
    
    
    2010General and administrative expenses*
    
    $
    (2,834
    )
    
    $
    (2,936
    )
    
    $
    (2,763
    )Other income (expense), net
    
    
    1,328
    
    
    
    (626
    )
    
    
    23Gain on sales of subsidiaries shares
    
    
    20,206
    
    
    
    
    
    
    
    Interest income on loan to a subsidiary
    
    
    12,146
    
    
    
    11,134
    
    
    
    11,568Interest income
    
    
    2,517
    
    
    
    263
    
    
    
    233Income before income taxes
    
    
    33,363
    
    
    
    7,835
    
    
    
    9,061Income taxes
    
    
    
    
    
    
    
    
    
    
    Income before share of net (losses) profits of subsidiaries, net of taxes
    
    
    33,363
    
    
    
    7,835
    
    
    
    9,061Share of net (losses) profits of subsidiaries, net of taxes
    
    
    (2,728
    )
    
    
    (6,183
    )
    
    
    5,945Net income attributable to Nam Tai shareholders
    
    $
    30,635
    
    
    $
    1,652
    
    
    $
    15,006* Amount of share-based compensation expense included in general and
administrative expenses
    
    $
    290
    
    
    $
    67
    
    
    $
    95
 F-30




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##### Table of Contents



SCHEDULE 1
 NAM TAI ELECTRONICS, INC.
 
 BALANCE SHEETS
 (In thousands of US dollars)
 December 31,2009
    
    
    2010ASSETSCurrent assets:Cash and cash equivalents
    
    $
    91,398
    
    
    $
    88,333Fixed deposits maturing over three months
    
    
    12,903
    
    
    
    Prepaid expenses and other receivables
    
    
    
    
    
    
    133Loan to a subsidiary  current
    
    
    51,906
    
    
    
    77,857Amounts due from subsidiaries
    
    
    11,134
    
    
    
    32,863Total current assets
    
    
    167,341
    
    
    
    199,186Equipments, net
    
    
    1
    
    
    
    Deposits for property, plant and equipment
    
    
    
    
    
    
    433Loan to a subsidiary  non-current
    
    
    233,573
    
    
    
    207,622Investments in subsidiaries
    
    
    (57,247
    )
    
    
    (51,302
    )Total assets
    
    $
    343,668
    
    
    $
    355,939LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accrued expenses and other payables
    
    $
    2,576
    
    
    $
    1,650Dividend payable
    
    
    
    
    
    
    8,961Amounts due to subsidiaries
    
    
    14,682
    
    
    
    11,194Total liabilities
    
    
    17,258
    
    
    
    21,805Shareholders equity:Common shares ($0.01 par value  authorized 200,000,000 shares,
issued and outstanding 44,803,735 shares as at December 31, 2009 and 2010)
    
    
    448
    
    
    
    448Additional paid-in capital
    
    
    285,264
    
    
    
    286,943Retained earnings
    
    
    40,706
    
    
    
    46,751Accumulated other comprehensive loss
    
    
    (8
    )
    
    
    (8
    )Total shareholders equity
    
    
    326,410
    
    
    
    334,134Total liabilities and shareholders equity
    
    $
    343,668
    
    
    $
    355,939
 F-31




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##### Table of Contents



SCHEDULE 1
 NAM TAI ELECTRONICS, INC.
 
 STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME
 (In thousands of US dollars, except share and per share data)
 AccumulatedCommon
    
    
    Additional
    
    
    
    
    
    
    Other
    
    
    TotalCommon Shares
    
    
    Shares
    
    
    Paid-in
    
    
    Retained
    
    
    Comprehensive
    
    
    Shareholders
    
    
    ComprehensiveOutstanding
    
    
    Amount
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    Equity
    
    
    IncomeBalance at January 1, 2008
    
    
    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
    )
    
    $
    326,410Equity-settled share-based payment
    
    
    
    
    
    
    
    
    
    
    95
    
    
    
    
    
    
    
    
    
    
    
    95Deemed contribution of services
    
    
    
    
    
    
    
    
    
    
    1,584
    
    
    
    
    
    
    
    
    
    
    
    1,584Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,006
    
    
    
    
    
    
    
    15,006
    
    
    $
    15,006Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    15,006Cash dividends ($0.20 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,961
    )
    
    
    
    
    
    
    (8,961
    )Balance at December 31, 2010
    
    
    44,803,735
    
    
    $
    448
    
    
    $
    286,943
    
    
    $
    46,751
    
    
    $
    (8
    )
    
    $
    334,134
 F-32




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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 31,2008
    
    
    2009
    
    
    2010Cash flows from operating activities:Net income attributable to Nam Tai shareholders
    
    $
    30,635
    
    
    $
    1,652
    
    
    $
    15,006Adjustments to reconcile net income attributable to Nam Tai shareholers to net cash provided
by operating activities:Share of net losses (profits) of subsidiaries, net of taxes
    
    
    2,728
    
    
    
    6,183
    
    
    
    (5,945
    )Dividend income from subsidiaries
    
    
    26,446
    
    
    
    
    
    
    
    Gain on disposal of subsidiaries
    
    
    (20,206
    )
    
    
    
    
    
    
    Depreciation
    
    
    1
    
    
    
    2
    
    
    
    Loss on disposal of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    1Dividend withheld
    
    
    (305
    )
    
    
    
    
    
    
    Share-based compensation expenses
    
    
    290
    
    
    
    67
    
    
    
    95Changes in current assets and liabilities:(Increase) decrease in prepaid expenses and other receivables
    
    
    (298
    )
    
    
    309
    
    
    
    (133
    )Increase (decrease) in accrued expenses and other payables
    
    
    173
    
    
    
    (779
    )
    
    
    658Net cash provided by operating activities
    
    $
    39,464
    
    
    $
    7,434
    
    
    $
    9,682Cash flows from investing activities:Proceeds on disposal of subsidiaries shares
    
    
    50,024
    
    
    
    
    
    
    
    Increase in deposit for purchase of property, plant and equipment
    
    
    
    
    
    
    
    
    
    
    (433
    )(Increase) decrease in fixed deposits maturing over three months
    
    
    
    
    
    
    (12,903
    )
    
    
    12,903Acquisition of subsidiaries shares
    
    
    (2,906
    )
    
    
    (43,434
    )
    
    
    (Increase) decrease in amounts due from subsidiaries
    
    
    (12,946
    )
    
    
    1,856
    
    
    
    (21,729
    )Decrease in other assets
    
    
    264
    
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    $
    34,436
    
    
    $
    (54,481
    )
    
    $
    (9,259
    )Cash flows from financing activities:(Decrease) increase in amounts due to subsidiaries
    
    
    (1,439
    )
    
    
    14,682
    
    
    
    (3,488
    )Proceeds from loan to a subsidiary
    
    
    
    
    
    
    25,952
    
    
    
    Payment for repurchase of share options
    
    
    (68
    )
    
    
    
    
    
    
    Dividend paid
    
    
    (38,774
    )
    
    
    (9,857
    )
    
    
    Net cash (used in) provided by financing activities
    
    $
    (40,281
    )
    
    $
    30,777
    
    
    $
    (3,488
    )Net increase (decrease) in cash and cash equivalents
    
    
    33,619
    
    
    
    (16,270
    )
    
    
    (3,065
    )Cash and cash equivalents at beginning of year
    
    
    74,049
    
    
    
    107,668
    
    
    
    91,398Cash and cash equivalents at end of year
    
    $
    107,668
    
    
    $
    91,398
    
    
    $
    88,333
 F-33




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##### Table of Contents



SCHEDULE 1
 NAM TAI ELECTRONICS, INC.
 
 NOTE TO SCHEDULE 1
 (in thousands of US dollars)
   F-34




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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
    
    Supplemental Rental Agreement dated May 1, 2007 between Nam Tais subsidiary, Jetup Electronic
(Shenzhen) Co., Ltd and a local collective committee of Shenzhen Baoan District (incorporated by reference
to Exhibit 4.16 to the Companys
Form 20-F for the year ended December 31, 2007 filed with the SEC on March 17, 2008).*4.6
    
    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).4.7
    
    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. (incorporated by reference to Exhibit 4.17 to
the Companys Form 20-F for the year ended December 31, 2009
filed with the SEC on March 16, 2010)*4.8
    
    Banking Facilities Letter Nam Tais subsidiary, Namtai Electronic (Shenzhen) Co., Ltd. and China
Construction Bank Corporation, Shenzhen Branch dated June 29, 2010 for Namtai Electronic (Shenzhen) Co.,
Ltd. to receive import facilities of up to $6,000,000.*4.9
    
    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 4.6
above) (incorporated by reference to Exhibit
4.18 to the Companys Form 20-F for the year ended December 31,
2009 filed with the SEC on March 16, 2010).4.10
    
    Banking Facilities Letter between Nam Tai subsidiary, Zastron Electronic (Shenzhen) Co. Ltd., and HSBC Bank
(China) Company Limited dated October 28, 2010 for Zastron Electronic (Shenzhen) Co. Ltd. to receive import
facilities of up to $5,000,000.4.11
    
    Guaranty of Nam Tai subsidiary Namtai Electronic (Shenzhen) Co. Ltd., in favour of HSBC Bank (China) Company
Limited with maximum liability of approximately $6 million for the banking facilities of Zastron Electronic
(Shenzhen) Co. Ltd.4.12
    
    Employment (Letter) Agreement dated November 25, 2010 between Nam and M. K. Koo, effective on October 1,
2010, for Mr. Koos services as Nam Tais CFO.4.13
    
    Employment (Letter) Agreement dated November 25, 2010 between Nam Tais subsidiary, Nam Tai Electronic &
Electrical Products Limited, or NTEEP, and M. K. Koo, effective on October 1, 2010, for Mr. Koos services
as NTEEPs President.8.1
    
    Diagram of Companys
subsidiaries at December 31, 2010. See the diagram following page 21 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 required by Rule
13a-14(a) and 18 U.S.C. Section 1350.12.2
    
    Certification  required by Rule
13a-14(a) and 18 U.S.C. Section 1350.13.1
    
    Certification pursuant to
Rule 13a-14(b) and 18 U.S.C. Section 1350.15.1
    
    Consent of Independent Registered Public Accounting Firm  Moore Stephens15.2
    
    Consent of Independent Registered Public Accounting Firm  Deloitte Touche Tohmatsu
 77




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##### Table of Contents



Exhibit No.
    
    Exhibit15.3
    
    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 an English Translation is provided in accordance with
Form 20-F Instructions to Exhibits and Rule 12b-12(d) under the Exchange Act). 78




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##### Table of Contents



SIGNATURE
  NAM TAI ELECTRONICS, INC.By:

/s/ Koo Ming KownKoo Ming KownChief Financial Officer  79