SEC Info - Nam Tai Property Inc. - ‘424B1’ on 10/30/97

SEC Info℠

Home

Help

Please Sign In

Nam Tai Property Inc. – ‘424B1’ on 10/30/97

As of: Thursday, 10/30/97 · Accession #: 950148-97-2655 · File #: 333-36135

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/30/97  Nam Tai Property Inc.             424B1                  1:291K                                   Bowne of Century City/FA

Prospectus — Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       424(B)(1) Filing                                      87    498K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Available Information Basic Subscription Privilege Business Canada Capitalization Common Shares Company, The Compensation Customers and Marketing Description of Securities Dividend Policy Enforceability of Civil Liabilities Exchange Rate Fluctuations Exercise of Rights Experts Expiration Date Foreign currency translations Hong Kong Incorporation of Certain Documents by Reference Index to Consolidated Financial Statements Legal Matters Liquidity and Capital Resources Management Management's Discussion and Analysis of Results of Operations and Financial Condition Method of Exercising Rights Notes to Consolidated Financial Statements Offering, The Oversubscription Privilege Price Range of Common Shares Principal Shareholders Property, plant and equipment Prospectus Summary Report of Independent Accountants Rights Agent Rights Offering, The Risk Factors Selected Consolidated Financial Data Share buy-back program Standby Underwriting Subscription Privileges The Company The Offering The Rights Offering Use of proceeds Warrants
1	1st Page - Filing Submission
2	Available Information
"	Enforceability of Civil Liabilities
3	Prospectus Summary
"	The Company
4	The Offering
7	Risk Factors
10	Exchange Rate Fluctuations
12	The Rights Offering
13	Expiration Date
"	Rights Agent
"	Subscription Privileges
"	Basic Subscription Privilege
"	Oversubscription Privilege
14	Method of Exercising Rights
16	Exercise of Rights
17	Use of proceeds
"	Dividend Policy
18	Price Range of Common Shares
19	Capitalization
20	Selected Consolidated Financial Data
21	Management's Discussion and Analysis of Results of Operations and Financial Condition
26	Liquidity and Capital Resources
31	Business
35	Customers and Marketing
39	Hong Kong
40	Canada
42	Management
43	Compensation
44	Principal Shareholders
45	Description of Securities
"	Common Shares
"	Warrants
49	Standby Underwriting
50	Legal Matters
"	Experts
51	Incorporation of Certain Documents by Reference
52	Index to Consolidated Financial Statements
53	Report of Independent Accountants
58	Notes to Consolidated Financial Statements
"	Property, plant and equipment
59	Foreign currency translations
68	Share buy-back program

424B1 1st Page of 87 TOC ↑Top Previous Next ↓Bottom Just 1st

As filed pursuant to Rule 424(b)(1)
under the Securities Act of 1933
Registration No. 333-36135

3,000,000 UNITS
EACH UNIT CONSISTING OF ONE COMMON SHARE AND
ONE REDEEMABLE COMMON SHARE PURCHASE WARRANT

[NAMTAI LOGO]

Nam Tai Electronics, Inc. (the "Company") is distributing to each holder of
its Common Shares, $0.01 par value ("Common Shares"), on October 10, 1997 (the
"Record Date"), nontransferable rights (the "Rights") to subscribe for one Unit
(collectively the "Units") for every three Common Shares owned on the Record
Date. The subscription price ("Subscription Price") is $17.00 per Unit. Each
Unit consists of one Common Share and one redeemable Common Share Purchase
Warrant (singly a "Warrant" and collectively the "Warrants") and each Warrant is
exercisable to purchase one Common Share at a price of $20.40 per share at any
time from the date of their issuance until November 24, 2000. The Common Shares
and the Warrants included in the Units will be separately transferable
immediately. The Warrants are redeemable by the Company at any time at $.05 per
Warrant if the average closing sale price of the Common Shares for 20
consecutive trading days within the 30-day period preceding the date the notice
is given equals or exceeds $25.50 per share. See "Description of Securities."

The rights will expire at 9:00 a.m. Los Angeles time on November 24, 1997
(the "Expiration Date"). Shareholders who exercise their Rights will have the
right to oversubscribe for Units at the Subscription Price, in an amount not
exceeding 40% of the number of Units initially subscribed for by such holder
subject to reduction to an amount not less than 15% of the Units initially
subscribed for by such holder upon the election (the "Standby Underwriters'
Oversubscription Cutback") of Joseph Charles & Associates, Inc., the
representative (the "Representative") of the standby underwriters (the "Standby
Underwriters") for the Standby Offering described below (the "Oversubscription
Privilege"), and subject in any event to pro rata allocation among
oversubscribers if there are insufficient Units to fill all oversubscriptions
(the "Rights Offering"). Subject to the terms and conditions of the Standby
Underwriting Agreement, any Units not subscribed for pursuant to the Rights
Offering (the "Underwritten Units") will be sold to the Standby Underwriters at
the lower of the Subscription Price per Unit or the closing bid price per Common
Share as reported on The Nasdaq National Market on the Expiration Date;
provided, however, that if the Representative elects to exercise the Standby
Underwriters' Oversubscription Cutback, the Underwritten Units will be sold to
the Standby Underwriters at the Subscription Price per Unit. The Standby
Underwriters will initially offer to sell the Underwritten Units (or the Common
Shares and Warrants included in the Units) to the public at the price paid by
the Standby Underwriters (the "Standby Offering"). See "The Rights Offering" and
"Standby Underwriting."

Mr. M. K. Koo, the Company's Chairman of the Board, and Mr. Tadao Murakami,
the Company's Chief Executive Officer, have agreed to exercise all of their
Rights pursuant to which they will purchase an aggregate of 802,906 Units,
assuming no exercise of their Oversubscription Privilege. Mr. Koo and Mr.
Murakami have advised the Company that they intend to fully exercise their
Oversubscription Privilege as well. See "The Rights Offering."

Since the Rights are not transferable, there will be no trading market for
the Rights. Prior to this offering, there has been no public market for the
Units or the Warrants. The Common Shares are included in The Nasdaq National
Market under the symbol "NTAIF." On October 29, 1997, the last reported sales
price of the Common Shares as reported on The Nasdaq National Market was $21.50
per share. The Subscription Price for the Units and the exercise price and other
terms of the Warrants were determined by negotiations between the Company and
the Representative of the Standby Underwriters based in part upon the most
recent bid price of the Common Shares. See "Price Range of Common Shares" and
"Standby Underwriting." The Warrants will be included on The NASDAQ National
Market under the symbol "NTAWF" upon consummation of this offering.

AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING AT PAGE 7 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

[Enlarge/Download Table]

=====================================================================================================================
SUBSCRIPTION PRICE PROCEEDS TO
AND PRICE TO PUBLIC STANDBY FEES(1) COMPANY(2)
---------------------------------------------------------------------------------------------------------------------
Per Unit.............................................. $17.00 $.68 $16.32
---------------------------------------------------------------------------------------------------------------------
Total................................................. $51,000,000 $2,040,000 $48,960,000
=====================================================================================================================

(1) Excludes a non-accountable expense allowance to the Representative of
$510,000 and the value of warrants to purchase up to 120,000 Units. The
Company has agreed to indemnify the Standby Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Standby Underwriting."

(2) Before deducting expenses of the Company estimated at $970,000, including
the Representative's non-accountable expense allowance.

Any Units offered by the Standby Underwriter are offered subject to prior
sale, when, as and if delivered to, and accepted by, the Standby Underwriter and
subject to its right to reject any order in whole or in part and to certain
other conditions. It is expected that certificates for the Units will be
available for delivery, against payment therefor, at the offices of Joseph
Charles & Associates, Inc. Beverly Hills, California or through the facilities
of Depository Trust Company on or about the fourth business day following the
Expiration Date.

JOSEPH CHARLES & ASSOCIATES, INC.
THE DATE OF THIS PROSPECTUS IS OCTOBER 30, 1997.

424B1 2nd Page of 87 TOC 1st Previous Next ↓Bottom Just 2nd

AVAILABLE INFORMATION

The Company files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such materials filed by the Company with
the Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511
and 7 World Trade Center, New York, New York 10048. Copies of such materials can
also be obtained by written request to the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.

The Company has filed a Registration Statement under the Securities Act
with the Commission with respect to the Securities offered hereby. This
Prospectus, which constitutes part of the Registration Statement, omits certain
of the information contained in the Registration Statement and the exhibits
thereto on file with the Commission pursuant to the Securities Act and the rules
and regulations of the Commission. Statements contained in this Prospectus such
as the contents of any contract or other document referred to are not
necessarily complete and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. A copy of
the Registration Statement, including the exhibits thereto, may be inspected
without charge at the Commission's principal office at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549, and copies of all or any part thereof
may be obtained from the Commission upon the payment of certain fees prescribed
by the Commission. The Commission also maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants, such as the Company, that file electronically with the
Commission. The address of the site is http://www.sec.gov.

ENFORCEABILITY OF CIVIL LIABILITIES

The Company is a holding corporation organized as an International Business
Company under the laws of the British Virgin Islands and its principal operating
subsidiary is organized under the laws of Hong Kong, where the Company's
principal executive offices are also located. The Company has appointed Stephen
Seung, 2 Mott St., Suite 601, New York, New York 10013 as its agent upon whom
process may be served in any action brought against it under the securities laws
of the United States. However, outside the United States, it may be difficult
for investors to enforce judgments against the Company obtained in the United
States in any such actions, including actions predicated upon civil liability
provisions of the Federal securities laws. In addition, all of the Company's
officers and most of its directors reside outside the United States and all of
the assets of these persons and of the Company are located outside of the United
States. As a result, it may not be possible for investors to effect service of
process within the United States upon such persons, or to enforce against the
Company or such persons judgments predicated upon the liability provisions of
the U.S. securities laws. The Company has been advised by Wilkinson & Grist, its
Hong Kong counsel, and McW. Todman & Co., its British Virgin Islands counsel,
that there is substantial doubt as to the enforceability against the Company or
any of its directors and officers located outside the United States in original
actions or in actions for enforcement of judgments of U.S. courts of liabilities
predicated on the civil liability provisions of the Federal securities laws.
------------------------

NOTICE TO NON-U.S. RESIDENTS

This offering has not been registered or qualified in any jurisdiction
outside of the United States of America. Investors who are not resident in the
United States should consult with their financial or legal advisors as to their
ability to participate in the Rights Offering and whether or not there are
resale restrictions associated with the securities acquired upon exercise of the
Rights.

------------------------

IN CONNECTION WITH THE STANDBY OFFERING, THE STANDBY UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE COMMON SHARES AND/OR THE WARRANTS OFFERED HEREBY AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTION MAY BE
EFFECTED ON THE NASDAQ NATIONAL MARKET OR OTHERWISE. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON SHARES ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 103 OF REGULATION M UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED (THE "EXCHANGE ACT"). SEE "STANDBY UNDERWRITING."

424B1 3rd Page of 87 TOC 1st Previous Next ↓Bottom Just 3rd

PROSPECTUS SUMMARY

This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual
results could differ materially from those projected in the forward-looking
statements as a result of the factors discussed in "Risk Factors" and elsewhere
in this Prospectus.

THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION
AND CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS.

THE COMPANY

Nam Tai is an independent provider of high quality manufacturing services
to original equipment manufacturers ("OEMs") in the consumer electronics
industry. All of the Company's manufacturing operations are based in the
People's Republic of China ("China"). Nam Tai assists OEMs in the design and
development of products and furnishes full turnkey manufacturing services to its
OEM customers utilizing advanced processes such as chip on board ("COB"),
surface mount technology ("SMT"), tape automated bonding ("TAB") and outer lead
bonding ("OLB") technologies. The Company provides hardware and software design,
plastic molding, component purchasing, assembly into finished products or
electronic subassemblies, post-assembly testing and shipping. The Company
manufactures a broad line of finished products for its OEM customers, including
personal organizers, linguistic products, calculators, integrated circuit ("IC")
or smart card readers (referred to as "IC card readers"). It also manufactures
electronic components and subassemblies for printed circuit boards ("PCBs").
These products include large scale integrated circuits ("LSI") bonded on PCBs
that are used in the manufacture of products such as electronic toys, and
subassemblies for liquid crystal display ("LCD") modules that are in turn used
in the manufacture of communications, camera and computer products. In addition,
Nam Tai provides OEMs with silk screening services for plastic parts, polyvinyl
chloride ("PVC") products and metal parts.

The Company moved its manufacturing facilities to Shenzhen, China in 1987
to take advantage of lower overhead costs and competitive labor rates and to
position itself to achieve low-cost, high volume manufacturing. The location of
Nam Tai's factory in Shenzhen is about 30 miles from Hong Kong, providing the
Company with close access to Hong Kong's infrastructure of communication and
banking as well as facilitating transportation of the Company's products out of
China through the port of Hong Kong.

The Company emphasizes high responsiveness to the needs of OEM customers
through the development and volume production of increasingly sophisticated and
specialized products. The Company seeks to build long-term relationships with
its customers through high quality standards (supported by ISO 9001
Certification), competitive pricing, strong research and development support,
advanced assembly processes and high volume manufacturing, and with key
suppliers through volume purchasing and reliable forecasting of component
purchases. Nam Tai believes that the potential for increased manufacturing
outsourcing by Japanese and U.S. OEMs in China is substantial especially through
its expanded production capacity and experience. Management believes Nam Tai's
record of providing timely delivery in volume of highquality, high technology,
low-cost products builds close customer relationships and positions the Company
to receive orders for more complex products. As the Company grows, management
will seek to maintain a low cost structure, reduce overhead where possible and
continuously strive to improve its manufacturing quality and processes.

The Company was incorporated as an International Business Company in the
British Virgin Islands in 1987. The Company's principal executive offices are
located in Hong Kong in Unit 9,15/F., Tower 1, China Hong Kong City, 33 Canton
Road, Kowloon, Hong Kong and its telephone and fax numbers are (852) 2341-0273
and (852) 2341-4164, respectively. The Company maintains the following toll-free
telephone number for United States investor relations: (800) 661-8831. Unless
the context otherwise requires, references to "Nam Tai" or the "Company" are to
Nam Tai Electronics, Inc. and its subsidiaries.

424B1 4th Page of 87 TOC 1st Previous Next ↓Bottom Just 4th

Except where otherwise indicated, all share and per share information in
this Prospectus (a) assumes no exercise of the Warrants included in the Units
offered hereby, the Representative's Warrants to purchase up to 120,000 Units,
warrants to purchase 10,000 Units to be sold to the Company's counsel upon
conclusion of the Standby Offering ("Counsel's Warrants") and options to
purchase up to an aggregate of 486,633 Common Shares that are outstanding or
reserved for future grant under the Company's Stock Option Plan and (b) reflect
a 2-for-1 stock split effected on July 16, 1992.

THE OFFERING

Securities offered......... Rights to subscribe for 3,000,000 Units; each Unit
consisting of one Common Share and one three-year
Warrant, each Warrant is exercisable to purchase
one Common Share at $20.40 per share.

Subscription Price......... $17.00 per Unit.

Last reported sales price
of
Common Shares.............. $21.50 per share on October 29, 1997.

Record Date................ October 10, 1997

Terms of Rights Offering... Common Shareholders will be issued nontransferable
rights entitling them to purchase one Unit for each
three Common Shares held on the Record Date (the
"Basic Subscription Privilege"). Fractional Rights
will not be issued. See "The Rights Offering."

Expiration Date............ The rights will expire at 9:00 a.m. Los Angeles
time on November 24, 1997.

Oversubscription
Privilege.................. Shareholders who exercise their Rights will have
the right to oversubscribe for Units at the
Subscription Price, in an amount not exceeding 40%
of the number of Units initially subscribed for by
such holder subject to reduction to an amount not
less than 15% of the Units initially subscribed for
by such holder pursuant to the Standby
Underwriters' Oversubscription Cutback, subject in
any event to pro rata allocation among
oversubscribers if there are insufficient Units to
fill all oversubscriptions. See "The Rights
Offering -- Subscription Privileges."

Standby Purchase
Commitment................. The Standby Underwriters, through the
Representative, have agreed, subject to the terms
and conditions of the Standby Underwriting
Agreement, to purchase that number of Units equal
to 3,000,000 less the number of Units purchased
through the exercise of Rights (the "Underwritten
Units"), at the lower of the Subscription Price per
Unit or the closing bid price per Common Share as
reported on The Nasdaq National Market on the
Expiration Date, provided, however, that if the
Representative elects to exercise the Standby
Underwriters' Oversubscription Cutback, the
Underwritten Units will be sold to the Standby
Underwriters at the Subscription Price per Unit.
The Standby Underwriters will initially offer to
sell such Units (or the Common Shares and Warrants
included in the Units) to the public at the price
paid by the Standby Underwriters (the "Standby
Offering"). See "Standby Underwriting."

Transferability of
Rights..................... The Rights are nontransferable.

Method of Exercising
Rights..................... Rights may be exercised by delivery to U.S. Stock
Transfer Corporation (the "Rights Agent"), 1745
Gardena Avenue, 2nd Floor, Glendale CA

424B1 5th Page of 87 TOC 1st Previous Next ↓Bottom Just 5th

91204, U.S.A., on or prior to the Expiration Date
of Rights certificates (which contain a
subscription form), properly completed and with
full payment for all Units subscribed for
(including Units subscribed for pursuant to the
exercise of the Oversubscription Privilege) by
cash, certified check, bank draft, wire transfer or
money order payable to the order of the Rights
Agent. The wire transfer address for the Rights
Agent is Nam Tai Electronics, Inc. Rights Offering
Account, c/o First Professional Bank, 606 Broadway
Street, Santa Monica, CA 90401, U.S.A., ABA
#122239335, Account #004-900588. The Rights Agent
will hold in custody all payments received upon
exercise of Rights until the Expiration Date and
the number of Units subscribed for is determined.
Holders will be refunded, without interest, any
amounts paid upon exercise of the Oversubscription
Privilege to the extent Units are not available to
fill all such oversubscriptions. The Rights Agent
will also accept a written or telegraphic guarantee
received prior to the Expiration Date from a
commercial bank or trust company having an office
in the United States, or a member of the New York
Stock Exchange or the National Association of
Securities Dealers, Inc. which states the name of
the subscriber, the number of Rights represented by
the Rights Certificate, and the number of Units
subscribed for, and which guarantees that the
Rights certificate and appropriate payment will be
promptly delivered to the Rights Agent. See "The
Rights Offering -- Exercise of Rights."

Additional Information..... Additional information relating to the method of
subscription and requests for additional copies of
this Prospectus should be directed to the Syndicate
Department at Joseph Charles & Associates, Inc.,
telephone (310) 278-4950, fax (310) 859-2877,
e-mail: jcacorpfin@aol.com.

Issuance of Units.......... Certificates evidencing the Common Shares and
Warrants composing the Units will be delivered to
subscribers as soon as practicable after the fourth
business day following the Expiration Date.

Common Shares Outstanding:

Before Offering....... 8,196,227 Common Shares(1)
After Offering........ 11,196,227 Common Shares(1)

Use of proceeds............ For working capital and general corporate purposes,
including possible acquisitions. See "Use of
Proceeds."

Risk Factors............... This offering involves a high degree of risk. See
"Risk Factors."

Nasdaq National Market
symbols --

Common Shares......... NTAIF
Warrants.............. NTAWF
---------------

(1) Based on 8,196,227 Common Shares outstanding at August 31, 1997.

424B1 6th Page of 87 TOC 1st Previous Next ↓Bottom Just 6th

SUMMARY CONSOLIDATED FINANCIAL INFORMATION(1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

[Enlarge/Download Table]

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------- -----------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- --------- --------- -------- -------

Income statement data:
Net sales.................... $ 57,955 $ 70,844 $ 96,564 $ 121,240 $ 108,234 $ 50,242 $71,596
Gross margin................. 10,940 14,098 17,223 23,152 22,185 9,943 19,840
Net income................... 2,503 5,197 8,099 11,419 9,416 3,742 13,333(2)
Dividends paid............... 853 -- 65 120 243 243 786

Per share amounts:
Net income................... $ 0.47 $ 0.87 $ 1.09 $ 1.40 $ 1.16 $ 0.46 $ 1.68(2)
Dividend paid................ 0.20 -- 0.01 0.02 0.03 0.03 0.10
Weighted average common
shares outstanding and
common stock equivalents... 5,302 5,976 7,460 8,172 8,142 8,213 7,947

[Enlarge/Download Table]

AT JUNE, 1997
AT DECEMBER 31, ------------------
------------------------------------------------ AS
1992 1993 1994 1995 1996 ACTUAL ADJUSTED(3)
-------- -------- -------- -------- -------- --------- -------

Balance sheet data:
Current assets.................. $ 23,071 $ 31,247 $ 45,520 $ 47,011 $ 46,609 $ 66,187 114,177
Property, plant and
equipment -- net.............. 6,337 7,396 14,624 27,635 36,487 32,287 32,287
Total assets.................... 29,474 39,530 66,287 79,281 88,391 102,333 150,323
Current liabilities............. 12,475 10,644 17,838 19,108 21,401 20,909 20,909
Non current liabilities......... 631 609 -- -- -- -- --
Shareholders' equity............ 16,368 28,162 48,449 60,173 66,990 81,424 129,414

---------------

(1) The Company's Consolidated Financial Statements are prepared in accordance
with generally accepted accounted principles in the United States of America
and are stated in U.S. dollars.

(2) Includes other income -- net of $2,611,000, primarily consisting of a gain
of $2,648,000 from the sale of a portion of a long-term investment. See Note
5 of Notes to Consolidated Financial Statements for June 30, 1996 and 1997
included elsewhere herein.

(3) As adjusted to reflect the sale of the Units offered hereby at the
Subscription Price of $17.00 per Unit and the addition of the net proceeds
to working capital. See "Use of Proceeds" and "Capitalization."

424B1 7th Page of 87 TOC 1st Previous Next ↓Bottom Just 7th

RISK FACTORS

INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW. PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER, TOGETHER WITH THE OTHER INFORMATION
APPEARING IN THIS PROSPECTUS, THE FOLLOWING FACTORS, AMONG OTHERS, IN EVALUATING
THE COMPANY AND ITS BUSINESS BEFORE PURCHASING THE UNITS OFFERED BY THIS
PROSPECTUS.

POLITICAL, LEGAL, ECONOMIC AND OTHER UNCERTAINTIES OF OPERATIONS IN CHINA AND
HONG KONG

Internal Political and Other Risks. The Company's single manufacturing
complex is located in China. As a result, the Company's operations and assets
are subject to significant political, economic, legal and other uncertainties
associated with doing business in China. Changes in policies by the Chinese
government resulting in changes in laws, regulations, or the interpretation
thereof, confiscatory taxation, restrictions on imports and sources of supply,
import duties, corruption, currency revaluations or the expropriation of private
enterprise could materially and adversely affect the Company. Over the past
several years, the Chinese government has pursued economic reform policies
including the encouragement of private economic activity and greater economic
decentralization. There can be no assurance that the Chinese government will
continue to pursue such policies, that such policies will be successful if
pursued, that such policies will not be significantly altered from time to time
or that business operations in China would not become subject to the risk of
nationalization, which could result in the total loss of investment in that
country. Economic development may be limited as well by the imposition of
austerity measures intended to reduce inflation, the inadequate development of
infrastructure and the potential unavailability of adequate power, water
supplies, transportation, communications, raw materials and parts. If for any
reason the Company were required to move its manufacturing operations outside of
China, the Company's profitability would be substantially impaired, its
competitiveness and market position would be materially jeopardized and there
can be no assurance that the Company could continue its operations.

Uncertain Legal System and Application of Laws. The legal system of China
relating to foreign investments is both new and continually evolving, and
currently there can be no certainty as to the application of its laws and
regulations in particular instances. China does not have a comprehensive system
of laws. Enforcement of existing laws or agreements may be sporadic and
implementation and interpretation of laws inconsistent. The Chinese judiciary is
relatively inexperienced in enforcing the laws that exist, leading to a higher
than usual degree of uncertainty as to the outcome of any litigation. Even where
adequate law exists in China, it may not be possible to obtain swift and
equitable enforcement of that law.

Current Dependence on Single Factory Complex. The Company's products are
manufactured exclusively at its complex located in Baoan County, Shenzhen,
China. The Company does not own the land underlying its factory complex. It
occupies the site under agreements with the local Chinese government. In the
case of its original facility, the lease agreement covers an aggregate of
approximately 150,000 square feet of factory space and expires in August 2007.
In the case of the newer facility, the Company is entitled to use the land upon
which it is situated until 2044. These agreements and the operations of the
Company's Shenzhen factories are dependent on the Company's relationship with
the local government. The Company's operations and prospects would be materially
and adversely affected by the failure of the local government to honor these
agreements. In the event of a dispute, enforcement of these agreements could be
difficult in China. Moreover, firefighting and disaster relief or assistance in
China is primitive by Western standards. Material damage to, or the loss of, the
Company's factory complex due to fire, severe weather, flood, or other act of
God or cause, even if covered by insurance, would have a material adverse effect
on the Company's financial condition, business and prospects.

Possible Changes and Uncertainties in Economic Policies. As part of its
economic reform, China has designated certain areas, including Shenzhen where
the Company's manufacturing complex is located, as Special Economic Zones.
Foreign enterprises in these areas benefit from greater economic autonomy and
more favorable tax treatment than enterprises in other parts of China. Changes
in the policies or laws

424B1 8th Page of 87 TOC 1st Previous Next ↓Bottom Just 8th

governing Special Economic Zones could have a material adverse effect on the
Company. Moreover, economic reforms and growth in China have been more
successful in certain provinces than others, and the continuation or increase of
such disparities could affect the political or social stability of China.

Inherent Risks of Business in China. Conducting business in China is
inherently risky. Corruption, extortion, bribery, pay-offs, theft, and other
fraudulent practices are common in China. The Company has attempted to implement
safeguards to prevent losses from such practices, but there can be no assurance
that despite these safeguards the Company will not suffer losses relating to
such practices.

Recent Relations with the U.S. In 1995, the United States considered
revocation of China's most favored nation ("MFN") trade status, which provides
China with the trading privileges generally available to trading partners of the
United States, and in 1996 the United States and China were involved in
controversy over the protection in China of intellectual property rights. In
1996, China and the United States reached an agreement on copyright protection
and the United States has extended China's MFN status to July 3, 1998. Various
interest groups continue to urge that the United States not renew China's trade
status. There can be no assurance that future controversies will not arise that
threaten trade relations between the United States and China or that the United
States will not revoke or refuse to extend China's MFN status. In any of such
eventualities, the business of the Company could be adversely affected.

Relations Between China and Taiwan. Relations between China and Taiwan have
been unresolved since Taiwan was established in 1949. The general election in
Taiwan in 1996 heightened tensions between them. Although not directly a threat
to Nam Tai, peaceful and normal relations between China and its neighbors
reduces the potential for events which could have an adverse impact on the
Company's business.

Operations in Hong Kong. The Company's executive and sales office, and
several of its customers and suppliers are located in Hong Kong, formerly a
British Crown Colony. Sovereignty over Hong Kong was transferred effective July
1, 1997 to China. The Company prepared for this transition in Hong Kong by
increasing the role and capability of its personnel in China to manage a number
of responsibilities previously managed through the Hong Kong office. Certain
other responsibilities have been transferred to the Company's office in
Vancouver, British Columbia, Canada. While the Company does not believe that the
transfer of sovereignty over Hong Kong to China will have a material adverse
effect on the Company's business, there can be no assurance as to the continued
stability of political, economic or commercial conditions in Hong Kong, and any
instability could have an adverse impact on the Company's business.

The Hong Kong dollar and the United States dollars have been fixed at
approximately 7.80 Hong Kong dollars to $1.00 since 1983. The Chinese government
has expressed its intention in the Basic Law to maintain the stability of the
Hong Kong currency after the sovereignty of Hong Kong was transferred to China.
There can be no assurance that this will continue and the Company could face
increased currency risks if the current exchange rate mechanism is changed. See
"-- Exchange Rate Fluctuations."

CUSTOMER CONCENTRATION; DEPENDENCE ON ELECTRONICS INDUSTRY

Sales to four major customers, Sharp Corporation, Texas Instruments
Incorporated, Nintendo, Inc. (which orders through Sharp Corporation) and Seiko
Instruments Inc. aggregated approximately 89.7%, 92.3% and 90.3% of the
Company's total net sales during the years ended December 31, 1994, 1995 and
1996. For information disclosing sales to each of these customers during these
years, see "Business -- Customers and Marketing." The Company's sales
transactions to all its OEM customers are based on purchase orders received by
the Company from time to time. Except for these purchase orders, the terms of
which in a few cases are supplemented by basic agreements dependent upon the
receipt of purchase orders, the Company has no written agreements with its OEM
customers. Although management believes that any one of its OEM customers could
be replaced eventually, the loss of any one of its major customers could have a
material adverse effect on the Company's business. See "Management's Discussion
of Results of Operations and Financial Condition."

Virtually all of the Company's sales are to customers in the electronics
industry, which is subject to rapid technological change and product
obsolescence. The factors affecting the electronics industry in general, or

424B1 9th Page of 87 TOC 1st Previous Next ↓Bottom Just 9th

any of the Company's major customers in particular, could have a material
adverse effect on the Company's results of operations.

POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

The Company's quarterly and annual operating results are affected by a wide
variety of factors that could materially and adversely affect net sales, gross
profit and profitability. This could result from any one or a combination of
factors such as the cancellation or postponement of orders, the timing and
amount of significant orders from the Company's largest customers, customers'
announcement and introduction of new products or new generations of products,
evolutions in the life cycles of customers' products, the Company's timing of
expenditures in anticipation of future orders, effectiveness in managing
manufacturing processes, changes in cost and availability of components, mix of
orders filled, adverse effects to the Company's financial statements resulting
from, or necessitated by, possible future acquisitions, and changes or
anticipated changes in economic conditions. The volume and timing of orders
received during a quarter are difficult to forecast. The Company's customers
from time to time encounter uncertain and changing demand for their products.
Customers generally order based on their forecasts. If demand falls below such
forecasts or if customers do not control inventories effectively, they may
reduce or postpone shipments of orders.

The Company's expense levels during any particular period are based, in
part, on expectations of future sales. If sales in a particular quarter do not
meet expectations, operating results could be materially adversely affected. In
addition, the Company's operating results are affected by seasonality during the
third quarter in anticipation of the Christmas buying season and in the first
quarter resulting from both the closing of the Company's factory in China for
one-half of a month for the Chinese New Year holidays and the general reduction
in sales following the holiday season. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations." The market segments served by
the Company are also subject to economic cycles and have in the past
experienced, and are likely in the future to experience, recessionary periods. A
recessionary period affecting the industry segments served by the Company could
have a material adverse effect on the Company's results of operations. Results
of operations in any period should not be considered indicative of results to be
expected in any future period, and fluctuations in operating results may also
result in fluctuations in the market price of the Company's Common Shares.

TECHNOLOGICAL CHANGES AND PROCESS DEVELOPMENT

The market for the Company's manufacturing services is characterized by
rapidly changing technology and continuing process development. The Company is
continually evaluating the advantages and feasibility of new manufacturing
processes, such as COB, SMT, TAB and OLB. The Company believes that its future
success may depend upon its ability to develop and market manufacturing services
which meet changing customer needs, maintain technological leadership and
successfully anticipate or respond to technological changes in manufacturing
processes on a cost-effective and timely basis. There can be no assurance that
the Company's process development efforts will continue to prove successful.

RISKS FROM POSSIBLE ACQUISITIONS

An important element of the Company's strategy is to review acquisition
prospects that would complement the Company's existing products and services,
augment its market coverage and sales ability or enhance its technological
capabilities. While the Company has no current agreements or understandings with
respect to any acquisitions, the Company may acquire businesses, products or
technologies in the future. See "Use of Proceeds." Future acquisitions by the
Company could result in accounting charges, potentially dilutive issuance of
equity securities, the incurrence of debt and contingent liabilities and
amortization expenses related to goodwill and other intangible assets, any of
which could materially adversely affect the Company's business, financial
condition and results of operations and/or the price of the Company's Common
Stock. Acquisitions entail numerous risks, including the assimilation of the
acquired operations, technologies and products, diversion of management's
attention to other business concerns, risks of entering markets in which the
Company has no or limited prior experience and potential loss of key employees
of acquired organizations. Management has no experience in assimilating acquired
organizations. There can be no

424B1 10th Page of 87 TOC 1st Previous Next ↓Bottom Just 10th

assurance as to the ability of the Company to successfully integrate the
products, technologies or personnel of any business that might be acquired in
the future, and the failure of the Company to do so could have a material
adverse effect on the Company's business, financial condition and results of
operations.

EXCHANGE RATE FLUCTUATIONS

The Company sells most of its products in United States dollars and
Japanese yen and pays expenses in United States dollars, yen, Hong Kong dollars,
Canadian dollars and Chinese renminbi. The Company is subject to a variety of
risks associated with changes among the relative value of the United States
dollar, yen, Hong Kong dollar, Canadian dollar and Chinese renminbi, but
management believes that the most significant exchange risk results from
material purchases made in yen. Approximately 35%, 33% and 28% of Nam Tai's
material costs have been in yen during the years ended December 31, 1994, 1995
and 1996. Sales made in yen accounted for approximately 15% of sales for the
year ended December 31, 1996, 18% of sales for 1995 and 13% of sales for 1994.
The net exposure has been declining as material costs in Japanese yen decrease
and sales increase. Based on oral agreements with its customers which are
customary in the industry, the Company believes its customers will accept an
increase in the selling price of manufactured products if the exchange rate of
the Japanese yen appreciates beyond a range of 5% to 10% although such customers
may also request a decrease in selling price in the event of a depreciation of
the Japanese yen. There can be no assurance its customers will accept such price
increase and the refusal to accept such price increase in the event of a severe
fluctuation of the Japanese yen at a time when sales made in yen are
insufficient to cover material purchases in yen would materially and adversely
affect the Company's operations.

Although only 9.3% of the Company's expenses were in Chinese renminbi in
1996, the appreciation of the renminbi against the U.S. dollar increases the
expenses of the Company when translated into U.S. dollars. There can be no
assurances that the renminbi will not increase significantly in value relative
to the U.S. dollar in the future.

From time to time, the Company attempts to hedge its currency exchange
risk. The Company's financial results have been affected in the past due to
hedging activities, resulting in foreign exchange gains of approximately $52,000
in 1995 and $68,000 in 1994 and foreign exchange losses of approximately
$400,000 in 1993 and $350,000 in 1992. The Company continually reviews its
hedging strategy but there can be no assurance that Nam Tai will not suffer
losses in the future as a result of currency hedging.

COMPETITION

Competition in the contract electronic manufacturing industry is intense.
The Company's primary competitors in the manufacture of its principal product
lines of calculators, personal organizers and linguistic products, are Kinpo
Electronics, Inc. (formerly Cal-Comp Electronics, Inc.) and Inventec Co. Ltd.,
both of Taiwan. While an OEM may prefer its approved suppliers, management
believes that OEMs tend to order from several suppliers in order to lessen
dependence on any one of them. Certain competitors may have substantially
greater technical, financial and marketing resources than the Company.

DEPENDENCE ON KEY PERSONNEL

The Company depends to a large extent on the abilities and continued
participation of Mr. M. K. Koo, its Chairman of the Board, and Mr. Tadao
Murakami, its Chief Executive Officer and President, who is in charge of the
Company's day-to-day manufacturing and marketing operations in China. The loss
of the services of Mr. Koo or Mr. Murakami could have a material adverse effect
on Company's business.

ENFORCEABILITY OF CIVIL LIABILITIES

424B1 11th Page of 87 TOC 1st Previous Next ↓Bottom Just 11th

laws of the United States. However, outside the United States, it may be
difficult for investors to enforce judgments against the Company obtained in the
United States in any such actions, including actions predicated upon civil
liability provisions of Federal securities laws. In addition, all of the
Company's officers and a majority of its directors reside outside the United
States and nearly all of the assets of these persons and of the Company are
located outside of the United States. As a result, it may not be possible for
investors to effect service of process within the United States upon such
persons, or to enforce against the Company or such persons judgments predicated
upon the liability provisions of U.S. securities laws. The Company has been
advised by its Hong Kong counsel and its British Virgin Island counsel that
there is substantial doubt as to the enforceability against the Company or any
of its directors and officers located outside the United States in original
actions or in actions for enforcement of judgments of U.S. courts of liabilities
predicated on the civil liability provisions of Federal securities laws.

CERTAIN LEGAL CONSEQUENCES OF INCORPORATION IN THE BRITISH VIRGIN ISLANDS

The Company is organized under the laws of the British Virgin Islands.
Principles of law relating to matters affecting the validity of corporate
procedures, the fiduciary duties of the Company's management, directors and
controlling shareholders and the rights of Nam Tai's shareholders differ from,
and may not be as protective of shareholders as, those that would apply if the
Company were incorporated in a jurisdiction within the United States. Directors
of the Company have the power to take certain actions without shareholder
approval, including an amendment of the Company's Memorandum or Articles of
Association, a change in the Company's authorized capital, and certain
fundamental corporate transactions, including reorganizations, certain mergers
or consolidations, and the sale or transfer of assets. In addition, there is
doubt that the courts of the British Virgin Islands would enforce liabilities
predicated upon U.S. securities laws.

RISKS OF INTERNATIONAL SALES

The products of the Company are sold in the United States and
internationally, principally in Japan, Europe and Hong Kong. International sales
may be subject to political and economic risks, including political instability,
currency controls and exchange rate fluctuations, and changes in import/export
regulations, tariff and freight rates. Changes in tariffs or other trade
policies could adversely affect the Company's customers or suppliers or decrease
the cost of products for Nam Tai's competitors relative to such costs for the
Company.

EXEMPTIONS UNDER THE EXCHANGE ACT AS A FOREIGN PRIVATE ISSUER

The Company is a foreign private issuer within the meaning of rules
promulgated under the Exchange Act. As such, and though its Common Shares are
registered under Section 12(g) of the Exchange Act, it is exempt from certain
provisions of the Exchange Act applicable to United States public companies
including: the rules under the Exchange Act requiring the filing with the
Commission of quarterly reports on Form 10-Q or current reports on Form 8-K; the
sections of the Exchange Act regulating the solicitation of proxies, consents or
authorizations in respect to a security registered under the Exchange Act; and
the sections of the Exchange Act 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 six months or less). Because of the exemptions under the Exchange Act
applicable to foreign private issuers, shareholders of the Company are not
afforded the same protections or information generally available to investors in
public companies organized in the United States.

AGREEMENT TO EXERCISE RIGHTS BY MR. M. K. KOO AND MR. TADAO MURAKAMI.

Mr. M. K. Koo, the Company's Chairman of the Board, and Mr. Tadao Murakami,
the Company's Chief Executive Officer, have agreed to fully exercise their Basic
Subscription Privilege pursuant to which they will purchase an aggregate of
802,906 Units, assuming no exercise of their Oversubscription Privilege. Mr. Koo
and Mr. Murakami have advised the Company that they intend to fully exercise
their Oversubscription Privilege as well.

424B1 12th Page of 87 TOC 1st Previous Next ↓Bottom Just 12th

SECURITIES MARKET FACTORS

The markets for equity securities have been volatile and the price of the
Company's Common Shares has been and could continue to be subject to wide
fluctuations in response to quarter to quarter variations in operating results,
news announcements, trading volume, general market trends and other factors. See
"Price Range of Common Shares." These same factors could be expected to affect
the market price of the Company's Warrants following this offering. There can be
no assurance that the Company's Common Shares and Warrants together will trade
in the future at market prices in excess of the Subscription Price. Certain
events, such as the issuance of Common Shares upon the exercise of the Warrants
included in the Units and the exercise of the Representative's Warrants and
Counsel's Warrants could also adversely effect the prevailing market prices of
the Company's securities. See "Description of Securities."

REDEMPTION OF WARRANTS

From and after the Expiration Date, the Warrants are redeemable by the
Company at $.05 per Warrant on 30 days' written notice provided the closing sale
price of the Common Shares for 20 consecutive trading days within the 30-day
period preceding the date of the notice of redemption equals or exceeds $25.50.
In the event the Company exercised the right to redeem the Warrants, a holder
would be forced either to sell or exercise the Warrants within 30 days of the
notice of redemption, or accept the redemption price. See "Description of
Securities -- Warrants."

VOTING DILUTION TO SHAREHOLDERS NOT EXERCISING RIGHTS

The voting dilution to persons who do not exercise their subscription
rights in the Rights Offering is approximately 36.6%. See "The Rights Offering"
and "Standby Underwriting."

THE RIGHTS OFFERING
THE RIGHTS

The Company is distributing to all holders of its outstanding Common Shares
of record on the Record Date nontransferable Rights to purchase one Unit for
every three Common Shares owned on the Record Date. The Subscription Price is
$17.00 per Unit. Fractional Rights will not be issued and any shareholder
holding a number of Common Shares on the Record Date that is not divisible by
three will receive a number of Rights equal to the number of Common Shares held
on the Record Date divided by three, rounded down to the nearest whole number.

Each Unit consists one Common Share and one Warrant and each Warrant is
exercisable to purchase one Common Share at a price of $20.40 per share at any
time from the Expiration Date until November 24, 2000. The Common Shares and the
Warrants included in the Units will be separately transferable immediately. The
Warrants are redeemable by the Company at any time after their issuance at $.05
per Warrant if the average closing sale price of the Common Shares for 20
consecutive trading days within the 30-day period preceding the date the notice
is given equals or exceeds $25.50. See "Description of Securities."

The issuance by the Company of the Units pursuant to the Rights Offering is
not conditioned upon the subscription of any minimum number of Units by holders
of the Rights. Mr. M. K. Koo, the Company's Chairman of the Board, and Mr. Tadao
Murakami, the Company's Chief Executive Officer, have agreed to exercise all of
their Rights pursuant to which they will purchase an aggregate of 802,906 Units,
assuming no exercise of their Oversubscription Privilege. Mr. Koo and Mr.
Murakami have also advised the Company that they intend to fully exercise their
Oversubscription Privilege as well. The Standby Underwriters have committed to
purchase from the Company and will reoffer to the public all Units that are not
purchased upon exercise of Rights. See "Standby Underwriting." Subject to
satisfaction of the terms and conditions of the Standby Underwriting Agreement
and the performance by the Standby Underwriter of its obligations thereunder,
the Company is assured of selling all of the Units offered in the Rights
Offering.

424B1 13th Page of 87 TOC 1st Previous Next ↓Bottom Just 13th

The Subscription Price for the Units and the exercise price and other terms
of the Warrants included therein were determined by negotiations between the
Company and the Representative based in part upon the most recent bid price of
the Common Shares. See "Standby Underwriting."

EXPIRATION DATE

The Rights expire at 9:00 a.m., Los Angeles time, on November 24, 1997. The
Company will not be obligated to honor any purported exercise of Rights received
by the Rights Agent after the Expiration Date, regardless of when documents
relating to such exercise were sent, except pursuant to the Guaranteed Delivery
Procedures described below.

RIGHTS AGENT

The Rights Agent is U.S. Stock Transfer Corp., 1745 Gardena Avenue, 2nd
Floor, Glendale CA 91204, telephone (818) 502-1404 and fax (818) 502-0674.

SUBSCRIPTION PRIVILEGES

Basic Subscription Privilege. Each Right will entitle the holder thereof to
receive, upon payment of the Subscription Price, one Unit. Certificates
representing the Common Shares and Warrants composing the Units purchased
pursuant to the Basic Subscription Privilege will be delivered to subscribers as
soon as practicable after the Expiration Date.

Oversubscription Privilege. Subject to the allocation and the Standby
Underwriters' Oversubscription Cutback described below, each Right also carries
the right to subscribe at the Subscription Price for up to that number of
additional Units equal to 40% of the number of Units purchased by the holder
pursuant to the Basic Subscription Privilege unless the Representative elects,
prior to the Standby Offering, to reduce the percentage from 40% to a lower
percentage that is not less than 15% of the Units initially subscribed for by
such holders (the "Standby Underwriters' Oversubscription Cutback"). At the
election of the Representative to exercise the Standby Underwriters'
Oversubscription Cutback, the number of units purchasable upon exercise of the
Oversubscription Privilege shall be reduced from up to 40% of the Units
initially subscribed for by holders to up to such lower percentage (not less
than 15% of the Units initially subscribed for by such holder exercising Rights)
as determined by the Representative upon its exercise of the Standby
Underwriters' Oversubscription Cutback. Notwithstanding anything to the contrary
herein, the right of each holder to subscribe at the Subscription Price for up
to that number of additional Units equal to a minimum of 15% and a maximum of
40% of the Units initially subscribed for (depending upon whether and to the
extent of the Representative's exercise of the Standby Underwriters'
Oversubscription Cutback) is referred to herein as the "Oversubscription
Privilege."

To the extent that any Units are not sold through the Basic Subscription
Privilege, Units will be available for purchase pursuant to the Oversubscription
Privilege. To the extent such excess Units ("Excess Units") are not sufficient
to satisfy all subscriptions pursuant to the Oversubscription Privilege, the
Excess Units will be allocated pro rata (subject to the elimination of
fractional Units) among those holders of Rights exercising the Oversubscription
Privilege, in proportion to the number of Units each beneficial holder
exercising the Oversubscription Privilege has purchased pursuant to the Basic
Subscription Privilege (as opposed to the number of Units requested pursuant to
the Oversubscription); provided, however, that if such pro rata allocation
results in any Rights holder being allocated a greater number of Excess Units
than such holder subscribed for pursuant to the exercise of such holder's
Oversubscription Privilege, then such holder will be allocated only such number
of Excess Units as such holder subscribed for and the remaining Excess Units
will be allocated among all other holders exercising the Oversubscription
Privilege. No fractional Units will be issued. Fractional Units otherwise
issuable upon exercise of the Oversubscription Privilege will be rounded down to
the nearest whole number. All beneficial holders who exercise the Basic
Subscription Privilege will be entitled to exercise the Oversubscription
Privilege. Certificates representing Units purchased pursuant to the
Oversubscription Privilege will be delivered to subscribers as soon as
practicable after the Expiration Date and after all prorations have been
effected.

424B1 14th Page of 87 TOC 1st Previous Next ↓Bottom Just 14th

Banks, brokers and other nominee holders of Rights who exercise the Basic
Subscription Privilege and the Oversubscription Privilege on behalf of
beneficial owners of Rights will be required to certify to the Rights Agent and
the Company, in connection with the exercise of the Oversubscription Privilege,
as to the aggregate number of Rights that have been exercised and the number of
Units that are being subscribed for pursuant to the Oversubscription Privilege
by each beneficial owner of Rights on whose behalf such nominee holder is
acting.

METHOD OF EXERCISING RIGHTS

Rights may be exercised by completing and signing the Subscription Form on
the reverse side of the Rights certificate and mailing or delivering the Rights
certificate, together with payment in full (in United States dollars) by cash,
certified check, bank draft, wire transfer or money order payable to the order
of "U.S. Stock Transfer Corporation" of the Subscription Price for each Unit
subscribed for pursuant to the Basic Subscription Privilege and the
Oversubscription Privilege, which must be received by the Rights Agent before
9:00 a.m., Los Angeles time, on the Expiration Date. The wire transfer address
for the Rights Agent is Nam Tai Electronics, Inc. Rights Offering Account, c/o
First Professional Bank, 606 Broadway Street, Santa Monica, CA 90401 U.S.A.,
Phone number (310) 458-1521, ABA #122239335, Account #004-900588.

Holders of Rights must follow all instructions for due exercise of their
Rights. Questions relating to the method of subscription and requests for
additional copies of this Prospectus should be directed to the Syndicate
Department at Joseph Charles & Associates, Inc., telephone (310) 278-4950. All
issues with respect to the validity, form and eligibility of the exercise of any
Rights will be resolved solely by the Company. The Company in its sole
discretion may waive any defect or irregularity, permit a defect or irregularity
to be corrected within such time as it may determine, or reject the exercise of
any Right. Subscriptions will not be deemed to have been made until all
irregularities have been waived or cured. Neither the Company nor the Rights
Agent will be under any duty to give notification of defects in subscription,
nor will either incur any liability for failure to give such notification. The
risk of delivery of all documents and payment is on subscribers, not the Company
or the Rights Agent. The Subscription Price will be deemed to have been received
by the Rights Agent only upon (i) clearance of any uncertified check, (ii)
receipt by the Rights Agent of any certified check or bank draft drawn upon a
U.S. bank or of any postal, telegraphic or express money order or (iii) receipt
of good funds in the Rights Agent's account designated above. IF PAYING BY
UNCERTIFIED PERSONAL CHECK, PLEASE NOTE THAT THE FUNDS PAID THEREBY MAY TAKE AS
MANY AS 10 BUSINESS DAYS OR MORE TO CLEAR. ACCORDINGLY, HOLDERS OF RIGHTS WHO
WISH TO PAY THE SUBSCRIPTION PRICE BY MEANS OF UNCERTIFIED PERSONAL CHECK ARE
URGED TO MAKE PAYMENT SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO ENSURE
THAT SUCH PAYMENT IS RECEIVED AND CLEARS BY SUCH DATE AND ARE URGED TO CONSIDER
PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER
OF FUNDS.

The address to which the Subscription Form and payment of the Subscription
Price should be delivered is:
U.S. STOCK TRANSFER CORP.
1745 Gardena Avenue
2nd Floor
Glendale CA 91204

If a Rights holder wishes to exercise Rights, but time will not permit such
holder to cause the Subscription Form evidencing such Rights to reach the Rights
Agent on or prior to the Expiration Date, such Rights may nevertheless be
exercised by following the Guaranteed Delivery Procedures described below.

Funds received in payment of the Subscription Price for Excess Units
subscribed for pursuant to the Oversubscription Privilege will be held in a
segregated account in custody pursuant to an agreement among the Rights Agent,
the Company and First Professional Bank pending issuance of such Excess Units.
If a Rights holder exercising the Oversubscription Privilege is allocated less
than all of the Units which such holder wished to subscribe for pursuant to the
Oversubscription Privilege, the excess funds paid by such holder in respect of
the Subscription Price for Units not issued will be returned by mail without
interest or deduction as soon as practicable after the Expiration Date.

424B1 15th Page of 87 TOC 1st Previous Next ↓Bottom Just 15th

Unless a Subscription Form (i) provides that the Units to be issued
pursuant to the exercise of Rights represented thereby are to be delivered to
the record holder of such Rights or (ii) is submitted for the account of an
Eligible Institution, signatures on such Subscription Form must be guaranteed by
an Eligible Institution.

Holders who hold Common Shares for the account of others, such as brokers,
trustees or depositaries for securities, should notify the respective beneficial
owners of such shares as soon as possible to ascertain such beneficial owners'
intentions and to obtain instructions with respect to the Rights. If the
beneficial owner so instructs, the record holder of such Rights should complete
Subscription Forms and submit them to the Rights Agent with the proper payment.
In addition, beneficial owners of Common Shares or Rights held through such a
holder should contact the holder and request the holder to effect transactions
in accordance with the beneficial owner's instructions.

The instructions accompanying the Subscription Forms should be read
carefully and followed in detail. DO NOT SEND SUBSCRIPTION FORMS TO THE COMPANY.

THE METHODS OF DELIVERY OF SUBSCRIPTION FORMS AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE RIGHTS AGENT WILL BE AT THE ELECTION AND RISK OF THE
RIGHTS HOLDERS. IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH CERTIFICATES AND
PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE DELIVERY TO
THE RIGHTS AGENT AND CLEARANCE OF PAYMENT PRIOR TO 9:00 A.M., LOS ANGELES TIME
ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST
TEN BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY URGED TO PAY, OR ARRANGE FOR
PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER
OF FUNDS.

All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by the Company, whose determinations
will be final and binding. The Company in its sole discretion may waive any
defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
Right. Subscriptions will not be deemed to have been received or accepted until
all irregularities have been waived or cured within such time as the Company
determines in its sole discretion. Neither the Company nor the Rights Agent will
be under any duty to give notification of any defect or irregularity in
connection with the submission of Subscription Forms or incur any liability for
failure to give such notification.

GUARANTEED LATE DELIVERY OF PAYMENT AND RIGHTS CERTIFICATES

Late subscriptions will be accepted subject to withholding certificates for
the Units until receipt of the duly completed and executed Rights certificate
and payment of the Subscription Price, provided that the following conditions
(the "Guaranteed Delivery Procedures") are met: prior to the Expiration Date,
the holder must deliver to the Rights Agent a written or telegraphic guarantee
from a commercial bank or trust company having an office in the United States,
or a member of the New York Stock Exchange, the American Stock Exchange or the
National Association of Securities Dealers, Inc., stating the name of the
subscriber, the number of Rights represented by the Rights certificates and the
number of Units subscribed for, and guaranteeing that the Rights certificate and
the appropriate payment will be promptly delivered to the Rights Agent; and a
properly completed Rights certificate, along with payment for all Rights
exercised must be received by the Rights Agent within five business days
following the Expiration Date. A form of Guaranteed Delivery is included along
with the Rights Certificate and this Prospectus.

RIGHTS OF SUBSCRIBERS

Subscribers will have no rights as shareholders of the Company with respect
to the Common Shares included in the Units until certificates representing the
Units are issued to them. Subscribers will have no right to revoke their
subscriptions after delivery to the Rights Agents.

424B1 16th Page of 87 TOC 1st Previous Next ↓Bottom Just 16th

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES RESPECTING THE RIGHTS

The following summary describes certain United States Federal income tax
considerations affecting holders of Common Shares receiving Rights in the Rights
Offering. This summary is based upon laws, regulations, rulings and decisions
currently in effect. This summary does not discuss all aspects of Federal
taxation that may be relevant to a particular investor or to certain types of
investors subject to special treatment under the Federal tax laws (for example,
banks, dealers in securities, life insurance companies, tax-exempt organizations
and foreign persons), nor does it discuss any aspect of state, local or foreign
tax laws. HOLDERS OF COMMON SHARES SHOULD THEREFORE CONSULT THEIR OWN TAX
ADVISORS CONCERNING THEIR INDIVIDUAL TAX SITUATIONS AND THE TAX CONSEQUENCES OF
THE RIGHTS OFFERING UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND
UNDER ANY APPLICABLE STATE, LOCAL OR FOREIGN TAX LAWS.

The Distribution of the Rights to Buy Units. When the Company distributes
the nontransferable right to buy Units to its shareholders, the value to such
right is not includable in the gross income of such shareholders by virtue of
section 305(a) of the INTERNAL REVENUE CODE OF 1986 (the "Code").

A Shareholder's Tax Basis in the Rights. As a general rule under section
307(a) of the Code if a shareholder of a corporation receives rights to acquire
its stock such as the Rights, in a distribution to which section 305(a) of the
Code applies, then, if such rights are exercised or sold (the Rights issued by
the Company are nontransferable, and thus cannot be sold) the basis of the stock
respect to which the rights were distributed (the "old stock"), and the basis in
the rights, respectively, shall be determined by an allocation between the old
stock and the rights, pro rata according to their respective fair market values.
Section 307(b) of the Code provides an exception to this general rule when the
fair market value of the rights at the time of the distribution is less than
fifteen percent (15%) of the fair market value of the old stock at the time of
the distribution. In such cases no allocation is required and the tax basis of
the rights is zero, unless the shareholder elects to determine the tax basis of
the old stock and the rights. The election, if made by a shareholder, must be
made with respect to all the rights received by him or her in a particular
distribution and with respect to all of the stock of the same class owned by him
in the corporation at the time of the distribution. If the old stock was
acquired at different times and for different prices, and the shareholder can
identify each separate lot, then the basis of each lot of old stock can be used
separately in the allocation. If the shareholder cannot identify each lot, then
the shareholder must use the first-in first-out tracing approach; use of the
average cost of all lots for basis is not permitted. The Company believes that
the fair market value of the Rights will be negligible compared to the value of
the Common Shares at the time they are distributed, and thus no distributee
shareholder will have an obligation to make the allocation. Instead they will
have the election to allocate described herein.

If a shareholder allows the Rights to lapse, he or she realizes neither
gain nor loss, and any basis previously allocated to the Rights will revert to
the underlying shares.

Exercise of Rights. A holder of Rights will not recognize gain or loss upon
the exercise of the Rights. A holder of Rights who receives Units upon such
exercise will acquire a basis in those Units equal to the Subscription Price
plus any basis previously allocated to the Rights. The holding period of Units
and their components received on exercise of the Rights will begin on the date
the Rights are exercised. For information concerning certain United States
Federal Income Tax Considerations to holders of the Units after the Rights are
exercised, see "DESCRIPTION OF SECURITIES -- Certain United States Federal
Income Tax Consequences Respecting the Units."

424B1 17th Page of 87 TOC 1st Previous Next ↓Bottom Just 17th

USE OF PROCEEDS

The net proceeds to the Company from the sale of 3,000,000 Units offered
hereby (at the Subscription Price of $17.00 per Unit) are estimated to be
approximately $47,990,000, after deducting the Standby Fees and expenses and
other offering expenses of the Company.

The Company intends to use the net proceeds for working capital and general
corporate purposes. A portion of the net proceeds may also be used for the
possible acquisitions of businesses, products or technologies that are
complementary to those of the Company. From time to time, the Company evaluates
potential acquisitions of such businesses, products or technologies; however,
the Company has no current understandings, agreements or commitments with
respect to any such transaction. Pending such uses, the Company intends to
invest the net proceeds in short-term, high-quality, interest-bearing
obligations. Any additional proceeds received upon exercise of the Warrants and
the Representative's Warrants and Counsel's Warrants, as well as income from
investments, will be added to working capital.

DIVIDEND POLICY

In the past Nam Tai paid quarterly dividends on its Common Shares, but such
dividends were discontinued in January 1993. In 1994, the Company began paying
annual dividends, paying shareholders aggregate dividends of $65,000 ($0.01 per
share) in 1994, $120,000 (0.015 per share) in 1995 and $243,000 ($0.03 per
share) in 1996 and $786,000 ($0.10 per share in 1997). It is the current policy
of Nam Tai to determine the actual amount of future dividends based upon the
Company's growth during the preceding year and to limit cash dividends to less
than 20% of net cash flow in order to have sufficient cash to finance growth.
Future dividends will be in the form of cash or stock or a combination of both.
There can be no assurance that any dividend on the Common Shares will be
declared or, if declared, what the amounts of dividends will be or whether such
dividends, once declared, will continue for any future period.

424B1 18th Page of 87 TOC 1st Previous Next ↓Bottom Just 18th

PRICE RANGE OF COMMON SHARES

The Company's Common Shares are traded on The Nasdaq National Market under
the symbol "NTAIF". The following table sets forth the high and low closing sale
prices in U.S. dollars ("US$") as reported by The Nasdaq National Market during
each of the quarters indicated.

[Download Table]

QUARTER ENDED HIGH LOW
------------------------------------------------------- ------- -------

March 31, 1995......................................... US$9.75 US$7.94
June 30, 1995.......................................... 10.50 9.00
September 30, 1995..................................... 17.25 9.00
December 31, 1995...................................... 13.88 10.75
March 31, 1996......................................... 13.13 9.25
June 30, 1996.......................................... 13.88 10.50
September 30, 1996..................................... 11.50 8.63
December 31, 1996...................................... 10.63 7.25
March 31, 1997......................................... 11.88 8.13
June 30, 1997.......................................... 16.63 9.63
September 30, 1997..................................... 31.63 16.75
December 31, 1997 (through October 29, 1997)........... 28.38 19.50

The 8,196,227 Common Shares of the Company outstanding as of August 31,
1997 were held by approximately 1,134 holders of record worldwide, including
1,106 holders of record in the United States. Management believes that holders
of record hold for approximately 2,700 beneficial holders. On October 29, 1997,
the closing sale price of a Common Share as reported on The Nasdaq National
Market was $21.50.

On December 12, 1996, the Company listed its shares on The Toronto Stock
Exchange under the symbol "NMT." The following table sets forth the high and low
closing sale prices in Canadian dollars ("Cdn.$") as reported by the Toronto
Stock Exchange for the periods indicated:

[Download Table]

QUARTER ENDED HIGH LOW
--------------------------------------------------- ---------- ----------

December 31, 1996 (from December 12, 1996)......... Cdn.$12.25 Cdn.$10.85
March 31, 1997..................................... 15.00 11.00
June 30, 1997...................................... 23.00 13.50
September 30, 1997................................. 41.00 23.00

Pursuant to the Company's voluntary application to delist its Common Shares
from the Toronto Stock Exchange, the Common Shares were delisted effective at
the close of business on September 30, 1997.

424B1 19th Page of 87 TOC 1st Previous Next ↓Bottom Just 19th

CAPITALIZATION

The following table sets forth the capitalization of the Company at June
30, 1997 and as adjusted to reflect the sale of 3,000,000 Units offered hereby
at the Subscription Price of $17.00 per Unit (assuming no part of the price is
allocated to the Warrants). The table should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere in the
Prospectus. Dollar amounts are in thousands.

[Download Table]

JUNE 30, 1997
-----------------------
ACTUAL AS ADJUSTED
-------- -----------

Long-term debt.......................................... $ -- $ --
Shareholders equity:
Common Shares, $0.01 par value per share:
20,000,000 shares authorized, 8,065,627 shares
issued and outstanding, and 11,065,627 shares to be
issued and outstanding as adjusted(1).............. 81 111
Additional paid in capital............................ 30,725 78,685
Stock option grants................................... 47 47
Retained earnings..................................... 50,544 50,544
Foreign currency translation adjustment............... 27 27
-------- --------
TOTAL SHAREHOLDERS EQUITY AND TOTAL CAPITALIZATION...... $ 81,424 $ 129,414
======== ========

---------------

(1) Between July 1, 1997 and October 29, 1997, the Company issued 157,267 Common
Shares upon exercise of options granted under its Stock Option Plan.

424B1 20th Page of 87 TOC 1st Previous Next ↓Bottom Just 20th

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data for 1992 through 1996 set forth
below are derived from the audited Consolidated Financial Statements of the
Company and Notes thereto. The Consolidated Financial Statements at December 31,
1995 and 1996 for the years ended December 31, 1994, 1995 and 1996 have been
audited by Price Waterhouse and appear elsewhere in this Prospectus. The
selected consolidated financial data set forth below at June 30, 1997 and for
the six months ended June 30, 1996 and 1997 are derived from the Company's
unaudited consolidated financial statements and, in the opinion of management,
include all adjustments (consisting only of normal recurring accruals)
considered necessary for a fair presentation of these data. Operating results
for the six months ended June 30, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997. The selected
consolidated financial data are qualified in their entirety by reference to, and
should be read in conjunction with, the Consolidated Financial Statements and
related notes and "Management's Discussion and Analysis of Results of Operations
and Financial Condition" included elsewhere in this Prospectus.

[Enlarge/Download Table]

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------------- -------------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- -------- -------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED)

INCOME STATEMENT DATA
Net sales................................ $57,955 $70,844 $96,564 $121,240 $108,234 $50,242 $71,596
Cost of sales............................ 47,015 56,746 79,341 98,088 86,049 40,299 51,756
------- ------- ------- -------- -------- ------- -------
Gross profit........................... 10,940 14,098 17,223 23,152 22,185 9,943 19,840
Costs and expenses
Selling, general and administrative
expenses............................. 7,595 7,735 9,370 11,441 12,702 6,323 7,664
Research and development expenses........ 598 547 239 945 950 412 541
------- ------- ------- -------- -------- ------- -------
8,193 8,282 9,609 12,386 13,652 6,735 8,205
Income from operations................... 2,747 5,816 7,614 10,766 8,533 3,208 11,635
Gain (loss) on disposal of fixed
assets............................... 42 -- (48) -- (123) -- (634)
Other income (loss) -- net............. 165 (413) 761 225 1,253 617 2,611(1)
Interest expense....................... (132) (137) (129) (161) (89) (19) (37)
------- ------- ------- -------- -------- ------- -------
Income from consolidated companies before
income taxes and minority interests.... 2,822 5,266 8,198 10,830 9,574 3,806 13,575
Benefit (provision) for taxes on
income................................. (219) (73) (173) 589 (158) (64) (242)
------- ------- ------- -------- -------- ------- -------
2,603 5,193 8,025 11,419 9,416 3,742 13,333
Minority interests in subsidiaries....... (100) 4 74 -- -- -- --
------- ------- ------- -------- -------- ------- -------
Net income............................... $ 2,503 $ 5,197 $ 8,099 $ 11,419 $ 9,416 $ 3,742 $13,333(1)
======= ======= ======= ======== ======== ======= =======
Dividend paid............................ $ 853 $ -- $ 65 $ 120 $ 243 $ 243 $ 786
======= ======= ======= ======== ======== ======= =======
Weighted average Common Shares
outstanding and common stock
equivalents............................ 5,302 5,976 7,460 8,172 8,142 8,213 7,947
PER SHARE AMOUNTS
Net income............................. $ 0.47 $ 0.87 $ 1.09 $ 1.40 $ 1.16 $ 0.46 $ 1.68(1)
Dividend paid.......................... $ 0.20 $ -- $ 0.01 $ 0.02 $ 0.03 $ 0.03 $ 0.10

[Enlarge/Download Table]

AT
AT DECEMBER 31, JUNE 30,
--------------------------------------------------- --------
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- --------

BALANCE SHEET DATA:
Current assets........................................... $23,071 $31,247 $45,520 $47,011 $46,609 $ 66,187
Property, plant and equipment -- net..................... 6,337 7,396 14,624 27,635 36,487 32,287
Total assets............................................. 29,474 39,530 66,287 79,281 88,391 102,333
Current liabilities...................................... 12,475 10,644 17,838 19,108 21,401 20,909
Non current liabilities.................................. 631 609 -- -- -- --
Shareholders' equity..................................... 16,368 28,162 48,449 60,173 66,990 81,424

---------------

(1) Includes for the six months ended June 30, 1997 a gain of $2,648,000 from
the sale of a portion of a long-term investment. See Note 5 of Notes to
Consolidated Financial Statements for June 30, 1996 and 1997 included
elsewhere herein.

424B1 21st Page of 87 TOC 1st Previous Next ↓Bottom Just 21st

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

This section contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth under the "Risk Factors" section of this Prospectus.
This section should be read in conjunction with the Company's Consolidated
Financial Statements included elsewhere herein.

RESULTS OF OPERATIONS

General

The Company derives its revenues principally from manufacturing consumer
electronic products and subassemblies for OEM customers in the electronics
industry. The Company manufactures a broad line of finished products for its OEM
customers, including personal organizers, linguistic products, calculators and
IC card readers. In addition, it manufactures electronic components and
subassemblies. In 1994, the Company discontinued sales of its proprietary
products, sales of which had not been material to the Company's operating
results prior to the sale of the product lines.

During each of the years ended December 31, 1994, 1995 and 1996, sales to
OEM customers accounted for 99% of total net sales. Management believes that
sales of personal organizers, linguistic products and calculators to its OEM
customers will continue to be an important line of business for the Company for
the next several years. The importance of sales of subassemblies and components
and other products to total revenues has been rising, and management expects
these products, particularly LCD modules and IC card readers, to contribute an
increasing proportion of total revenue. See "Business -- Customers and
Marketing."

The consumer electronics industry is very competitive and the Company is
continuously under pressure to lower the selling price and therefore reduce the
gross profit margin of its existing product lines. In response to these
pressures, the Company seeks to upgrade its technology in order to be capable of
manufacturing more advanced and specialized products with higher unit margins.
It also strives to improve customer relations and quality. The Company believes
there is less competition in more advanced and specialized products due to the
complexity involved in manufacturing and the lower numbers of direct
competitors.

Since 1987, when the Company moved its manufacturing operations to China,
Nam Tai has derived substantially all of its operating income from its China
operations. The Company plans to continue increasing the scope of its operations
and investment in China.

Under current British Virgin Islands law, Nam Tai is not subject to tax on
its income. Most of the Company's operating profits accrue in China, where its
effective tax rate is 10%, and in Hong Kong, where the corporate tax rate on
assessable profits is currently 16.5%. The Company receives tax credits in China
related to its reinvestment of profits on China operations, which reduces the
overall tax payable by the Company. See Note 9 of Notes to Consolidated
Financial Statements.

The Company values its inventory at the lower of cost or market. Until
March 1997, the Company used a standard cost system to value its inventory,
which is purchased in U.S. dollars, Japanese yen and Hong Kong dollars under
which system, at the end of each quarter, the Company revalued its inventory
based upon actual costs and the resulting standard cost revaluation flowed
through cost of sales when the inventory is sold. Since March 1997, the Company
has used a cost system which is effectively an actual cost system.

424B1 22nd Page of 87 TOC 1st Previous Next ↓Bottom Just 22nd

The first quarter is typically the Company's slowest sales period because,
as is customary in China, the Company's factories in China are closed for two
weeks for the Chinese New Year holidays. The following table sets forth certain
selected operating data for the quarters indicated. This information has been
derived from the unaudited consolidated financial statements of the Company
which in the opinion of management contain all adjustments (consisting of normal
recurring adjustments) necessary for a fair presentation of such information.
These operating results are not necessarily indicative of results for any future
period and results may fluctuate significantly from quarter to quarter in the
future.

[Enlarge/Download Table]

1994 1995
------------------------------------- -------------------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
------- ------- ------- ------- ------- ------- ------- -------
(AMOUNTS IN THOUSANDS)

Net sales..................................... $14,888 $24,625 $32,127 $24,924 $22,443 $30,065 $35,514 $33,218
Gross profit.................................. 2,602 4,681 5,702 4,238 4,256 5,987 6,967 5,942
Net income.................................... 655 2,003 3,494 1,947 1,556 3,210 4,637 2,016
Net income per share.......................... $ 0.09 $ 0.28 $ 0.48 $ 0.24 $ 0.19 $ 0.39 $ 0.57 $ 0.25

[Enlarge/Download Table]

1996 1997
------------------------------------- -----------------
Q1 Q2 Q3 Q4 Q1 Q2
------- ------- ------- ------- ------- -------
(AMOUNTS IN THOUSANDS)

Net sales...................................................... $25,357 $24,885 $28,005 $29,987 $31,152 $40,444
Gross profit................................................... 5,036 4,907 6,344 5,898 7,246 12,594
Net income..................................................... 2,333 1,409 3,318 2,356 5,570 7,763
Net income per share........................................... $ 0.29 $ 0.17 $ 0.40 $ 0.30 $ 0.71 $ 0.97

The following table presents selected consolidated financial information
stated as a percentage of net sales for the years ended December 31, 1994, 1995
and 1996 and the six months ended June 30, 1996 and 1997:

[Enlarge/Download Table]

SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------- --------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
(UNAUDITED)

Net sales.............................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.......................................... 82.2 80.9 79.5 80.2 72.3
Gross profit........................................... 17.8 19.1 20.5 19.8 27.7
----- ----- ----- ----- -----
Costs and expenses
Selling, general and administrative expenses........... 9.7 9.4 11.7 12.6 10.7
Research and development expenses...................... 0.2 0.8 0.9 0.8 0.8
----- ----- ----- ----- -----
9.9 10.2 12.6 13.4 11.5
Income from operations................................. 7.9 8.9 7.9 6.4 16.2
Gain (loss) on disposal of fixed assets................ 0.0 0.0 (0.1) 0.0 (0.9)
Other income (loss) -- net............................. 0.8 0.2 1.1 1.2 3.6
Interest expense....................................... (0.2) (0.2) (0.1) 0.0 0.0
----- ----- ----- ----- -----
Income from consolidated companies before income taxes
and minority interests............................... 8.5 8.9 8.8 7.6 18.9
Benefit (provision) for taxes on income................ (0.2) 0.5 (0.1) (0.1) (0.3)
Minority interests in subsidiaries..................... 0.1 0.0 0.0 0.0 0.0
----- ----- ----- ----- -----
Net income............................................. 8.4 9.4 8.7 7.5 18.6
===== ===== ===== ===== =====

SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996

Nam Tai's sales increased by 42.5% to $71,596,000 in the six months ended
June 30, 1997 compared to $50,242,000 for the six months ended June 30, 1996,
primarily due to increases in sales to Texas Instruments Incorporated and Seiko
Instruments.

The Company's gross profit margin increased to $19,840,000 or 27.2% of
sales for the six months ended June 30, 1997 from $9,943,000 or 19.8% of sales.
The principal reasons for the increase in profit margins were

424B1 23rd Page of 87 TOC 1st Previous Next ↓Bottom Just 23rd

(i) the production of new, higher margin products, (ii) lower cost of raw
materials, in part the result of the weakness of the Japanese yen in relation to
the U.S. dollar, and (iii) improvements in quality control which resulted in the
reduction of the scrap rate.

Selling, general and administrative expenses increased by 21.2% to
$7,664,000 in the six months ended June 30, 1997 from $6,323,000 for the six
months ended June 30, 1996. As a percentage of sales, selling, general and
administrative expenses decreased to 10.7% of sales in the six months ended June
30, 1997 from 12.6% of sales for the six months ended June 30, 1996. The
increase in absolute dollars principally reflected additional staff and costs
required to provide services to the Company in line with growth in sales. The
decrease in such expenses as a percent of sales was the result of efficiencies
obtained in general administrative expenses as the Company handled a greater
level of activity with existing resources.

Research and development expenses increased to $541,000 in the six months
ended June 30, 1997 from $412,000 in 1996. Namtek, the Company's
software-development subsidiary which began operations in early 1996, accounted
for approximately 36% and 34% of the research and development expenses in the
six months ended June 30, 1996 and 1997, respectively. These expenses were
substantially recovered from fees paid by third parties.

Loss on disposal of fixed assets was $634,000 in the six months ended June
30, 1997 as compared to zero for the six months ended June 30, 1996. The loss in
1997 principally related to the sale of certain of the Company's real property
in Burnaby, British Columbia, Canada.

Other income -- net increased to $2,611,000 during the six months ended
June 30, 1997 from $617,000 for the six months ended June 30, 1996. This income
increased principally as a result of a gain of $2,648,000 from the sale of a
portion of the Company's equity interest in Deswell in early 1997 and dividend
income from its ownership of Deswell's common shares. The overall increase for
the six months ended June 30, 1997 was reduced by increases of approximately
$209,000 in miscellaneous expenses over such expenses in the six months ended
June 30, 1996 and decreases in interest income of approximately $107,000 from
interest income during the six months ended June 30, 1996.

Income before income taxes increased to $13,575,000 for the six months
ended June 30, 1997 from $3,806,000 for the six months ended June 30, 1996. The
improvement of approximately 257% was primarily attributable to higher operating
income reflecting increased sales volume and higher gross profit margins
associated with 1997 sales.

The income tax expense of $242,000 for the six months ended June 30, 1997
compares to an income tax expense of $64,000 for the six months ended June 30,
1996. For further information on income taxes payable by the Company see, Note 8
of Notes to Consolidated Financial Statements relating to the six months ended
June 30, 1996 and 1997.

Net income increased by 256% to $13,333,000 (or 18.6% of sales) for the six
months ended June 30, 1997 compared to $3,742,000 (or 7.5% of sales) for the six
months ended June 30, 1996. This resulted in earnings per share for the six
months ended June 30, 1997 of $1.68 compared to earnings per share of $0.46 for
the six months ended June 30, 1996. The increase in net income and earnings per
share was in line with the increase in sales taking into consideration the
higher operating margins. The weighted average number of common shares
outstanding and common stock equivalents decreased to 7,947,421 for the six
months ended June 30, 1997 from 8,212,954 for the six months ended June 30,
1996, reflecting the repurchase by the Company of 273,500 shares, principally in
the latter half of 1996, through the Company share repurchase program offset by
issuances of 229,400 Common Shares in the first half of 1997 upon exercise of
stock options granted under the Company's stock option plan.

YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995

Nam Tai's sales declined by 11% to $108,234,000 for the year ended December
31, 1996 compared to $121,240,000 for the year ended December 31, 1995. A
reduction in orders from certain OEM customers, particularly Sharp Corporation,
caused the decline in sales. Management believes the reduction in orders was the
result of forecasts of year-end sales levels by certain of the Company's OEM
customers which had caused

424B1 24th Page of 87 TOC 1st Previous Next ↓Bottom Just 24th

them to place extensive orders with the Company for production during the third
and fourth quarters of 1995. Lower than expected year-end 1995 sales by these
OEM customers caused them to curtail orders for production in 1996. The decline
in orders from Sharp Corporation during 1996 was partially offset by a
substantial increase in sales to certain other OEM customers, particularly Texas
Instruments Incorporated.

The Company's gross profit decreased 4.2% to $22,185,000 for the year ended
December 31, 1996 from $23,152,000 for 1995. The principal reason for the
decrease in gross profit was the decrease in sales. Also contributing to the
decrease in gross profit was an increase in the cost of sales resulting from a
net write-off of $415,000 of inventory. During the course of the audit of its
financial statements for the year ended December 31, 1996, the Company confirmed
that certain components included in its raw material inventory were not likely
to be used in connection with future production, and due to the passage of time,
could not be charged to customers who would have otherwise been responsible for
the reimbursement of cost. Consequently, the Company elected to write-off the
cost of such inventory.

Despite the reduction in sales and additions to costs of sales, Nam Tai's
gross profit margin improved to 20.5% in 1996 from 19.1% in 1995. This was
principally because of lower component costs and efficiencies implemented to
reduce manufacturing costs. Lower component costs were attributable to the
general decline in the cost of certain components as well as the decline in the
value of the yen relative to the U.S. dollar. The latter benefitted the Company
as it purchases a substantial volume of components from Japanese companies which
are paid in yen.

Selling, general and administrative expenses increased by 11.0% to
$12,702,000 or 11.7% of sales in the year ended December 31, 1996 from
$11,441,000 or 9.4% of sales for the year ended December 31, 1995. The increase
in absolute dollars was principally the result of costs associated with the
addition of management personnel to the Company's operations in China, Hong Kong
and Canada, plus certain one-time expenses relating to the opening of Phase I of
the Company's new factory.

Research and development expenses increased marginally to $950,000 in 1996
from $945,000 in 1995. Namtek, the Company's software-development subsidiary
which began operations in early 1996, accounted for approximately 40% of the
research and development expenses in 1996. These expenses were substantially
recovered from fees paid by third parties.

Loss on disposal of fixed assets was $123,000 in the year ended December
31, 1996 as compared to zero for the year ended December 31, 1995. The loss in
1996 principally related to $120,000 of leasehold improvements Nam Tai had made
to its former principal executive offices in Hong Kong under a lease which was
prematurely terminated as of the end of 1996. See the discussion regarding this
lease, its termination and Nam Tai's relocation of its principal executive
offices in Hong Kong to new premises under "Liquidity and Capital Resources"
below.

Other income (net) increased to $1,253,000 for the year ended December 31,
1996 from $225,000 for the year ended December 31, 1995. This income consisted
chiefly of interest income of $1,092,000 on the Company's cash balances and
$294,000 of income from dividends paid by Deswell to the Company as a
shareholder. In 1995, other income was reduced as a result of fourth quarter
charges totaling $936,000 in regard to a provision for the Company's
compensation for loss of office arrangement and a one-time bonus to workers.

Interest expense decreased to $89,000 for the year ended December 31, 1996
from $161,000 for the year ended December 31, 1995 as a result of the reduction
in the Company's borrowings under its banking facilities.

Income from continuing operations before income tax was $9,574,000 for the
year ended December 31, 1996 as compared to $10,830,000 for the year ended
December 31, 1995. The decrease of 11.6% was primarily due to decreased 1996
sales.

The income tax expense of $158,000 for the year ended December 31, 1996
compares to a recovery of $589,000 for the prior year. The income tax expense in
1996 relates to income taxes on Hong Kong operations and is comparable to 1995
income taxes paid with respect to Hong Kong operations. In 1995, the Company

424B1 25th Page of 87 TOC 1st Previous Next ↓Bottom Just 25th

reversed a provision of $705,000 against income taxes owing from China
operations following receipt of a refund of 1994 income taxes on China
operations. The refund in 1995 of 1994 China income taxes resulted in an overall
recovery of total income taxes paid for 1995. As a result of expected refunds of
income taxes attributable to China operations, the Company made no provision for
such income taxes in either 1995 or 1996. The refund of 1995 income taxes on
China operations was received in 1996 and the refund of 1996 income taxes from
such operations is expected in 1997.

Net income decreased by 17.5% to $9,416,000 (or 8.7% of sales) for the year
ended December 31, 1996 compared to $11,419,000 (or 9.4% of sales) for the year
ended December 31, 1995. This resulted in earnings per share for the year ended
December 31, 1996 of $1.16 compared to earnings per share of $1.40 for the year
ended December 31, 1995. The decrease in net income and earnings per share was
in line with the decrease in sales taking into consideration the higher
operating margins.

The weighted average number of Common Shares outstanding and common stock
equivalents decreased to 8,142,131 for the year ended December 31, 1996 from
8,171,750 for the year ended December 31, 1995, reflecting the repurchase by the
Company of 273,500 shares through its share repurchase program in effect from
September 11, 1996 to December 4, 1996.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

Nam Tai's sales increased by 26% to $121,240,000 in the year ended December
31, 1995 compared to $96,564,000 for the year ended December 31, 1994, primarily
due to increases in sales to Sharp Corporation, Nintendo, Inc. (which orders
through Sharp Corporation) and Texas Instruments Incorporated. The Company also
received additional orders from Optrex Corporation.

The Company's gross profit margin increased to $23,152,000 or 19.1% of
sales for the year ended December 31, 1995 from $17,223,000 or 17.8% of sales.
The principal reasons for the increase in profit margins were (i) low cost of
raw materials, in part the result of the weakness of the Japanese yen in
relation to the US dollar, and (ii) improvements to quality control which
resulted in a reduction of the scrap rate.

Selling, general and administrative expenses increased by 22.1% to
$11,441,000 or 9.4% of sales in the year ended December 31, 1995 from $9,370,000
or 9.7% of sales for the year ended December 31, 1994. The increase in absolute
dollars mainly reflected additional staff and costs required to provide services
to the Company in line with growth in sales. The decrease in such expenses as a
percent of sales was the result of efficiencies obtained in general
administrative expense as the Company handled a greater level of activity with
existing resources. Other expenses included the initial start up expenses
associated with the formation of the new subsidiary operation, Namtek.

No gain or loss on disposal of fixed assets was incurred in the year ended
December 31, 1995 compared to a net loss on disposal of fixed assets of $48,000
in the year ended December 31, 1994. Other income -- net declined to $225,000
for the year ended December 31, 1995 from $761,000 for the year ended December
31, 1994. This income mainly consists of $1,548,000 of interest income less a
$560,000 charge relating to undepreciated cost of the compensation for loss of
office arrangement and $376,000 associated with a one-time bonus to staff in
Hong Kong, China and Canada to recognize exceptional work in the fourth quarter
of 1995 (a period of high activity). The provision taken to expense the
compensation for loss of office arrangement applied to certain senior management
who were the beneficiaries of such arrangement but did not involve the payment
of any funds and will eliminate the need to accrue for this expense in the
future.

Interest expense increased to $161,000 for the year ended December 31, 1995
from $129,000 for the year ended December 31, 1994.

Income from continuing operations before income taxes increased to
$10,830,000 for the year ended December 31, 1995 from $8,198,000 for the year
ended December 31, 1994. The improvement of 32.1% was primarily attributable to
higher operating income reflecting increased sales volume and higher gross
profit margins associated with 1995 sales.

424B1 26th Page of 87 TOC 1st Previous Next ↓Bottom Just 26th

The income tax benefit of $589,000 for the year ended December 31, 1995
compared to a provision for income tax expense of $173,000 for the year ended
December 31, 1994. The tax recovery resulted from the refund of $782,000 China
tax paid for the year ended December 31, 1994 which was received during the
second quarter of 1995. Hong Kong tax payable was $106,000 for the year ended
December 31, 1995.

Minority interest in subsidiaries declined to nil for the year ended
December 31, 1995 from $74,000 for the year ended December 31, 1994 following
the repurchase of shares of NT Canada from a minority shareholder during 1994.

Net income increased by 41% to $11,419,000 (or 9.4% of sales) for the year
ended December 31, 1995 compared to $8,099,000 (or 8.4% of sales) for the year
ended December 31, 1994. This resulted in earnings per share for the year ended
December 31, 1995 of $1.40 compared to earnings per share of $1.09 for the year
ended December 31, 1994. The increase in net income and earnings per share was
in line with the increase in sales taking into consideration the higher
operating margins. The weighted average number of common shares outstanding and
common stock equivalents increased to 8,171,750 for the year ended December 31,
1995 from 7,459,570 for the year ended December 31, 1994, reflecting the
exercise of warrants issued according to the 1993 Rights Offering which occurred
in September 1994.

LIQUIDITY AND CAPITAL RESOURCES

Current assets remained relatively stationary at $46,609,000 for the year
ended December 31, 1996 compared to $47,011,000 for the year ended December 31,
1995. Cash, cash equivalents and term deposits were also relatively stationary
at $17,741,000 for the year ended December 31, 1996 versus $17,362,000 for the
year ended December 31, 1995. At June 30, 1997, current assets were $66,187,000
and cash and cash equivalents and term deposits were $31,057,000. The principal
reasons for the increase in current assets, cash and cash equivalents and term
deposits were increased cash generated from operations and increases in accounts
receivable, each resulting from increased sales, and cash received from the
proceeds of the sale of a portion of the Company's equity interest in Deswell.
Accounts receivable at December 31, 1996 decreased by 6.3% from the level at
December 31, 1995, essentially corresponding to the decrease in sales during
1996. Accounts receivable at June 30, 1997 increased by 40% over levels at
December 31, 1996, reflecting the increases in sales during 1997. Inventories at
December 31, 1996 increased by 0.8% from levels at December 31, 1995, reflecting
an inventory turnover period of 45 days in 1996 versus 37 days for 1995. The
increase in the inventory turnover was principally the result of Nam Tai's
transfer of responsibility for accounts payable on China deliveries from the
Hong Kong office to personnel at the Company's China factory complex.
Inventories at June 30, 1997 decreased by 8.7% from levels at December 31, 1996.

Total current assets increased modestly to $47,011,000 at ended December
31, 1995 compared to $45,520,000 at December 31, 1994. Cash, cash equivalents
and term deposits declined to $17,362,000 for the year ended December 31, 1995
from $23,681,000 for the year ended December 31, 1994. This decline of
$6,319,000 resulted from expenditures on new plant construction. The increase in
accounts receivable and inventories for the year ended December 31, 1995
compared to 1994 was in line with the increase in sales during 1995 over 1994
plus additional receivables at December 31, 1995 in the amount of $2,620,000
which related to the residential property in West Vancouver, British Columbia,
Canada. The sale of this property was concluded as at December 31, 1995.

In December 1994, the Company invested $3,931,000 for approximately 14% of
Deswell's then outstanding capital stock. In July 1995, Deswell completed an
initial public offering of its securities in the United States and the Company's
investment was diluted to approximately 10.5% of Deswell's outstanding shares as
at December 31, 1995. In July 1996, the Company exercised warrants to purchase
an additional 12,000 shares of Deswell for $119,000. As at December 31, 1996,
this investment was shown at cost and was approximately 87% of the market value
of Deswell common shares as reported on The Nasdaq National Market at December
31, 1996. Subsequent to the end of the year, the market price of the Deswell
shares rose substantially on The Nasdaq National Market and the Company elected
to sell a portion of its investment in Deswell, reducing its stake in Deswell to
approximately 5.8% of its shares reported outstanding at December 31, 1996. The
Company realized a gain of $2,648,000 on sales of 230,000 shares for total gross
proceeds of

424B1 27th Page of 87 TOC 1st Previous Next ↓Bottom Just 27th

$4,553,000. In July 1997, the Company sold an additional 160,000 shares of
Deswell for $4,164,000, realizing an additional gain of $2,840,000, and further
reducing its stake in Deswell to approximately 1.9% of its shares reported
outstanding at June 30, 1997.

The increases in property, plant and equipment -- net $36,487,000 as at
December 31, 1996 from $27,635,000 as at December 31, 1995 principally reflects
the expenditure of capital on new plant facilities during 1996. A total of
$9,904,000 was expended finalizing the construction of the new facility
resulting in a total expenditure, excluding land and production equipment, of
$21,812,000. In addition, $1,100,000 of new production equipment costs were
incurred during 1996. The increase in property, plant and equipment - net to
$27,635,000 for the year ended December 31, 1995 from $14,624,000 for the year
ended December 31, 1994 reflects the expenditure of capital on new plant
facilities, net of depreciation.

At December 31, 1996, 28% and 51% of the Company's identifiable assets were
located in Hong Kong and China, respectively, as compared to 32% and 54%,
respectively, at December 31, 1995. At June 30, 1997, 25% and 41% of the
Company's identifiable assets were located in Hong Kong and China, respectively.
In 1996, the Company implemented a new policy of holding surplus funds in
Canada. Consequently, cash and cash equivalents and term deposits representing
93% and 53% of the total cash and cash equivalents and term deposits of
$31,057,000 and $17,741,000 were held by the Company in Canada at June 30, 1997
and December 31, 1996, respectively, versus nil as at December 31, 1995. As a
result, identifiable assets in Canada represented 34% and 21% of total assets at
June 30, 1997 and December 31, 1996, respectively, as compared to 14% of total
assets at December 31, 1995.

In the past, the Company used short-term bank borrowings to assist it to
meet its working capital requirements and to provide funds for investment in
property, plant and equipment. Short-term bank borrowings totaled $273,000 as at
December 31, 1995. During 1996 and the first half of 1997, the Company's capital
requirements were financed from internally generated funds and short-term
borrowings were reduced to nil at December 31, 1996 and were zero at June 30,
1997.

At both December 31, 1996 and June 30, 1997, Nam Tai had in place general
banking facilities with six financial institutions aggregating $49,200,000. Such
facilities, which are subject to annual review, permit the Company to obtain
overdrafts, lines of credit for forward exchange contracts, letters of credit,
import facilities, trust receipt financing, shipping guarantees and working
capital, as well as fixed loans. As at December 31, 1996 and June 30, 1997, the
Company had utilized approximately $7,629,000 and $5,220,000, respectively,
under such general credit facilities and had available unused credit facilities
of $41,571,000 and $43,980,000. Interest on notes payable averaged 5.1% per
annum during the year ended December 31, 1996. During the year ended December
31, 1996 and the six months ended June 30, 1997, the Company paid a total of
$89,000 and $37,000 in interest on indebtedness.

Accounts payable increased by 20.7% to $16,184,000 for the year ended
December 31, 1996 from $13,408,000 for the year ended December 31, 1995,
principally as a result of changes to policy regarding the payment of vendors
associated with the transfer, during 1996, of responsibility for accounts
payable on China deliveries from the Hong Kong office to personnel at the
Company's China factory complex. Accounts payable increased by 8.2% to
$17,523,000 for the six months ended June 30, 1997 from the level at December
31, 1996 because of the increase in sales. The Company had no long term debt
during 1995, 1996 or the first six months of 1997.

Cash flow from operations for 1996 included net income of $9,416,000 and
depreciation of $2,676,000. The net cash addition due to changes in working
capital (excluding cash and bank borrowings) was $3,347,000. During 1996, the
Company's investment activities utilized $11,650,000 in additions to property,
plant and equipment, mainly consisting of capitalized construction costs for the
Company's new factory and additional equipment costing $1,100,000.

During 1995, the Company commenced the expansion of its complex in China,
including the construction of Phase I of its new manufacturing facility adjacent
to the Company's original factory. The Company used existing cash balances to
finance the construction. Construction was substantially completed in May 1996
and the Company began to utilize portions of the facility during the period from
June 1 through December 31,

424B1 28th Page of 87 TOC 1st Previous Next ↓Bottom Just 28th

1996. As a result of the partial use of the new facility during the last seven
months of 1996, the Company recorded a depreciation expense of $346,000 for the
year ended December 31, 1996.

In September 1994, the Company agreed to a three-year lease for office
space in Hong Kong and effective March 1, 1995 moved its principal executive and
marketing offices there. The rent for the first two years was approximately
$17,800 per month. As a result of zoning regulations which limited the use that
the Company could make of the space comprising its Hong Kong headquarters, Nam
Tai was required to terminate its existing lease and relocate its principal
executive and Hong Kong marketing offices prior to the expiration of the lease
term. Accordingly, in February 1997, the Company leased new premises for its
principal executive offices in Hong Kong. The rent for the new space is
approximately $17,900 per month for the first two years and is to be
renegotiated for the third year. The Company moved into the new premises in late
March 1997. The Company recorded a charge of $120,000 for the year ended
December 31, 1996 in regard to leasehold improvements Nam Tai had made in the
terminated leasehold.

Net cash utilized by financing activities was $2,873,000 in 1996 and net
cash provided by financing activities was $1,140,000 for the six months ended
June 30, 1997. No major financing was undertaken during 1996. Financing
activities during the first six months of 1997 consisted of the issuances of
Common Shares upon exercise of stock options and payment of dividends.

The Company believes that there are no material restrictions (including
foreign exchange controls) on the ability of Nam Tai's non-China subsidiaries to
transfer funds to the Company in the form of cash dividends, loans, advances, or
product/material purchases. With respect to the Company's China subsidiaries,
there are restrictions on the payment of dividends and the removal of dividends
from China due to the Company's reinvestment program for tax purposes, however,
the Company believes that such restrictions will not have a material effect on
the Company's liquidity or cash flow.

In the past Nam Tai paid quarterly dividends on its Common Shares, but such
dividends were discontinued in January 1993. In 1994, the Company began paying
annual dividends, paying shareholders aggregate dividends of $65,000 ($0.01 per
share) in 1994, $120,000 (0.015 per share) in 1995, $243,000 ($0.03 per share)
in 1996 and $786,000 ($0.10 per share) in the first six months of 1997. It is
the current policy of Nam Tai to determine the actual amount of future dividends
based upon the Company's growth during the preceding year and to limit cash
dividends to less than 20% of net cash flow in order to have sufficient cash to
finance growth. Future dividends will be in the form of cash or stock or a
combination of both. There can be no assurance that any dividend on the Common
Shares will be declared or, if declared, what the amounts of dividends will be
or whether such dividends, once declared, will continue for any future period.

Management believes that cash flow from operations and the net proceeds of
this offering will be sufficient to fund the Company's capital requirements for
at least the next 12 months.

IMPACT OF INFLATION

The Company believes that inflation has not had a material effect on its
past business. The Company has generally been able to increase the price of its
products in order to keep pace with inflation. The Company believes that
increases in labor costs, which represent the most significant component of the
Company's production costs (other than material costs), will not materially
affect its business because of the Company's utilization of less expensive labor
through its operations in China. Labor and overhead expenses related to Nam
Tai's Chinese factory amounted to 8.7% of the Company's total expenses before
operating income during the year ended December 31, 1996 and 6.2% during the
year ended December 31, 1995, the increase principally resulting from the
expansion of the facility.

EXCHANGE RATES

The Company sells a majority of its products in U.S. dollars and pays for
its material components in Japanese yen, U.S. dollars and Hong Kong dollars. It
pays labor costs and overhead expenses in renminbi, the currency of China (the
basic unit of which is the yuan), Hong Kong dollars and Canadian dollars. The

424B1 29th Page of 87 TOC 1st Previous Next ↓Bottom Just 29th

exchange rate of the Hong Kong dollar to the United States dollar has been fixed
by the Hong Kong government since 1983 at approximately HK$7.80 to $1.00 through
the currency issuing banks in Hong Kong and accordingly has not presented a
currency exchange risk. Canadian operations are relatively small with the
percentage of expense in Canadian dollars representing 2% of the total expenses
for the year ended December 31, 1996.

Management believes that the Company's most significant foreign exchange
risk results from material purchases made in Japanese yen. Approximately 28%,
33% and 35% of Nam Tai's material costs have been in yen during the years ended
December 31, 1996, 1995 and 1994, respectively. Sales made in yen account for
approximately 15% of sales for the year ended December 31, 1996, 18% of sales
for 1995 and 13% of sales for 1994. The net currency exposure has been declining
as material costs in yen decrease and sales in yen increase. The Company also
believes its customers will accept an increase in the selling price of
manufactured products if the exchange rate of the yen appreciates beyond a range
of 5% to 10% although such customers may also request a decrease in selling
price in the event of a depreciation of the Japanese yen. This Company's belief
is based on oral agreements with its principal customers which management
believes are customary between OEMs and their suppliers. However, there can be
no assurance that such agreements will be honored, and the refusal to honor such
an agreement in the event of a severe fluctuation of the yen at a time when
sales made in yen are insufficient to cover material purchases in yen would
materially and adversely affect the Company's operations.

Effective January 1, 1994, China adopted a floating currency system whereby
the official exchange rate equaled the market rate. Since the market and
official renminbi rates were unified, the value of the renminbi against the
dollar has been stable. This is in spite of significant inflation during 1994
and 1995 which placed devaluation pressure on the renminbi. The Chinese
Government took steps to restrict credit to counteract these pressures, which
taken together with the net inflow of capital into China, resulted in stability
of the currency against the United States dollar. This stability was maintained
through 1996. The Company believes that because its Chinese operations presently
are confined to manufacturing products for export, any devaluation of the
renminbi would benefit Nam Tai by reducing its costs in China provided that
action or other economic pressures do not lead to fundamental changes in the
present economic climate in China.

Foreign exchange transactions involving the renminbi take place through the
Bank of China or other institutions authorized to buy and sell foreign exchange
or at an approved foreign exchange adjustment center (known as a "swap center").
In the past, when exchanging Hong Kong dollars for renminbi, the Company used a
swap center to obtain the best possible rate. When translating the Chinese
company account into U.S. dollars, the Company uses the same exchange rate as
quoted by the Bank of China. Since January 1, 1994, when China adopted a
floating currency system (whereby the official rate is equal to the market
rate), swap centers and banks in China offer essentially the same market rates,
facilitating the exchange of Hong Kong dollars for renminbi. The adoption of a
floating currency system has had no material impact on the Company.

On April 1, 1996, new regulations on foreign exchange were implemented by
the China government. Trade-related foreign exchange receipts and disbursements
are generally not subject to restriction in accordance with the provisions on
settling, selling or buying foreign exchange. Capital account foreign exchange
receipts and disbursements are subject to control and organizations in China are
restricted in foreign currency transactions which must take place through
designated banks.

The Company may elect to hedge its currency exchange risk when it judges
such action may be required. In an attempt to lower the costs of expenditures in
foreign currencies, management will periodically enter into forward contracts to
buy or sell foreign currency(ies) against the U.S. dollar through one of its
banks. A buy contract allows Nam Tai to buy a targeted currency at a fixed price
for up to one year, but which the Company normally books forward six months.
Conversely, a sale contract allows the Company to sell the currency at a fixed
price during the contract period. The type of contract and currency that the
Company enters into depends on whether management believes the currency will
rise or fall against the dollar in the succeeding period. Nam Tai will enter
into buy forward contracts if it appears the currency will rise and sell forward
contracts if it appears the currency will fall against the dollar. If there is a
fluctuation in the two currencies a gain or loss occurs between the buy forward
exchange rate and the sell forward exchange rate. The Company

424B1 30th Page of 87 TOC 1st Previous Next ↓Bottom Just 30th

enters into foreign currency contracts in order to manage foreign exchange
exposures. However, since the foreign currency contracts are not intended to
hedge identifiable foreign currency commitments, as required by generally
accepted accounting principles, the contracts are marked to the market with any
realized and unrealized gains or losses recorded as other income (loss) -- net.

As at December 31, 1996, the Company had no open forward contracts while at
December 31, 1995 there were open forward contracts amounting to $60,000. During
1996, Nam Tai recorded no gain from hedging transactions. The Company's
financial results have been affected in the past due to hedging activities,
resulting in foreign exchange gains of approximately $52,000 in 1995 and $68,000
in 1994 and foreign exchange losses of approximately $400,000 in 1993 and
$350,000 in 1992. These exchange gains and losses were caused by the difference
between the buy forward rate and sell forward rate for exchange contracts
between the foreign currencies (Japanese yen in 1992 and 1993, Canadian dollars
in 1994 and 1995) entered into by the Company. The Company is continuing to
review its hedging strategy and there can be no assurance that Nam Tai will not
suffer losses in the future as a result of currency hedging.

NEW ACCOUNTING STANDARDS

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings Per Share. The new rule will
require specific disclosure of both diluted earnings per share and earnings per
common share calculated without the dilutive impacts of outstanding stock
options or convertible securities. There was no material difference between
reported earnings per share and diluted earnings per share for the periods
presented in the Company's financial statements.

Also during 1997, Statements of Financial Accounting Standards No. 129, No.
130 and No. 131 were issued. Implementation of these standards will not have an
effect on the amount of the net income presented in the Company's financial
statements.

424B1 31st Page of 87 TOC 1st Previous Next ↓Bottom Just 31st

BUSINESS

The Company moved its manufacturing facilities to Shenzhen, China in 1987
to take advantage of lower overhead costs and competitive labor rates available
and to position itself to achieve low-cost, high volume manufacturing. The
location of Nam Tai's factory in Shenzhen, about 30 miles from Hong Kong, also
permits the Company to manage easily manufacturing operations from Hong Kong,
and facilitates transportation of the Company's products out of China through
the port of Hong Kong.

INDUSTRY OVERVIEW

As a result of the recognition by OEMs in the electronics industry of the
rising costs of operating a manufacturing site and the need to add more
sophisticated and expensive manufacturing processes and equipment, OEMs have
turned increasingly to outside contract manufacturers. By doing so, OEMs are
able to focus on research, product design and development, marketing and
distribution, and to rely on the production expertise of contract manufacturers.
Other benefits to OEM's of using contract manufacturing include: access to
manufacturers in regions with low labor and overhead costs and with leading-edge
technology, such as COB, TAB and OLB, reduced time to market, reduced capital
investment (which is increasingly important in view of the introduction of TAB
and OLB, both of which are capital intensive technologies), improved inventory
management, improved purchasing power and improved product quality. In addition,
the use of contract manufacturers has helped OEMs manage production in view of
increasingly shorter product life cycles. The Company believes that many OEMs
now view contract manufacturers as an integral part of their business and
manufacturing strategy, rather than as a backup source to in-house manufacturing
capacity during peak periods.

Nam Tai believes that factors underlying an OEM's selection of a particular
manufacturer are quality, price and technological know-how. Consequently, the
Company expects continued growth in outsourcing to contract manufacturers that
have attained ISO 9000 certification, that are located in regions such as China,
which offer abundant low cost labor, land and construction resources, and that
are capable of high levels of technological know-how.

THE COMPANY'S STRATEGY

424B1 32nd Page of 87 TOC 1st Previous Next ↓Bottom Just 32nd

of its expanded production capacity and experience. Management believes Nam
Tai's record of providing timely delivery in volume of high-quality, high
technology, low-cost products builds close customer relationships and positions
the Company to receive orders for more complex products. As the Company has
grown, management has sought to maintain a low cost structure, reduce overhead
where possible and continuously strive to improve its manufacturing quality and
processes. Nam Tai's growth strategy is comprised of the following key elements:

- Low Cost Manufacturing. Nam Tai believes that its ability to be
competitive in its markets stems from its commitment to production in
China where it can manufacture in high volumes at low cost. The Company
has access to abundant pools of low cost labor, and believes that because
it offers its workers better living and working conditions than those
typically available for comparable workers in China, the Company enjoys
greater production efficiency and less turnover among workers. Due to the
low labor, land and construction costs in Shenzhen, the Company believes
that the location of its production facilities in China contribute
significantly to the Company's ability to lower its production costs.

- Close Customer Relationships. Nam Tai has long-standing relationships
with its major OEM customers, who work closely in the design and
manufacture of new products with the Company's Japanese senior managers.
It is common for Sharp Corporation, Seiko Instruments Inc., Canon Inc.
and other of Nam Tai's customers to maintain representatives at the
Company's China factory. These customers transfer important manufacturing
process technology and know-how to the Company's engineers. The Company
believes that OEM customers will increasingly use contract manufacturers
that have a high degree of technological know-how to produce uniformly
high quality products. The Company seeks to leverage its existing
customer base to expand orders, and to leverage its manufacturing
sophistication to enter markets for more sophisticated products.

- Concentration on New Products and Advanced Assembly Processes. The
Company utilizes its product development staff to assist OEMs to develop
new products that employ specific feature sets and price points, as well
as engineer products and production designs that permit cost-efficient
manufacturing. To position itself to manufacture more sophisticated
products, the Company has made advances in its use of SMT, TAB and OLB
technologies that the Company believes make its PCB assembly process
capabilities comparable to those currently available from the most
technologically advanced Japanese and U.S. manufacturers. The Company has
been pursuing a plan to enhance the technological capability of its
engineering and production staff through various means. This plan has
permitted the Company to penetrate markets for more technologically
sophisticated products as its own manufacturing techniques have become
more advanced. Nam Tai has, for example, recruited new factory management
personnel with extensive experience in engineering, production and
management and who, through know-how gained from their prior experience,
assist the Company to implement the advanced process technology
transferred to the Company from its OEM customers.

- Excellence in Manufacturing. The Company is committed to excellence in
manufacturing and continually strives for improvements in its processes.
In December 1993, the Company's operations in China achieved
certification under the international quality management standard ISO
9002. Management believes sophisticated customers increasingly are
requiring their manufacturers to be ISO 9000-certified and that
manufacturers of equipment that are not so qualified are increasingly
looking to manufacturers like Nam Tai that have done so, rather than
undertaking the expensive and timeconsuming process of qualifying their
own operations. The Company achieved ISO 9001 certification in February
1996, which added design and development to the standards Nam Tai had
already achieved in the areas of production, installation, servicing
procedures, final inspection and product testing.

- Close Relationships with Key Suppliers/Strategic Alliance. The Company
believes that the ability to obtain a steady and sufficient supply of key
components is a critical factor in remaining competitive. The Company
believes its ability to purchase components in volume and to provide
accurate purchasing forecasts has played a pivotal role in building close
relationships with key component suppliers. In addition, in order to
expand production, enter markets for more advanced products, and

424B1 33rd Page of 87 TOC 1st Previous Next ↓Bottom Just 33rd

maintain quality and reliability, the Company has pursued strategic
alliances with certain suppliers of components the Company deems critical
to its operations. To that end, the Company has made a material equity
investment in its key plastics supplier with operations in China, and
intends to continue to evaluate its participation in similar strategic
alliances in the future.

PRODUCTS

The following table sets forth the percentage of net sales of each of the
Company's product lines for the years ended December 31, 1994, 1995 and 1996 and
the six months ended June 30, 1997:

[Enlarge/Download Table]

SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------- JUNE 30,
PRODUCT LINE 1994 1995 1996 1997
------------------------------------------------- ----- ----- ----- -----------

Personal organizers and linguistic products...... 47% 47% 36% 27%
Electronic calculators........................... 34 30 35 55
Subassemblies, components and other products..... 17 22 28 17
Silk screening................................... 1 1 1 1
Discontinued products(1)......................... 1 0 0 0
---- ---- ---- ----
100% 100% 100% 100%
==== ==== ==== ====

---------------

(1) Includes proprietary health care products, such as electronic scales,
thermometers and blood pressure meters, which were discontinued in 1994.

Personal Organizers and Linguistic Products

The Company produces various types of electronic personal organizers,
particularly telephone directories and business card organizers with scheduler,
clock, memo pad and calculator functions. The linguistic products manufactured
by Nam Tai include electronic spell checkers, dictionaries and language
translators. These models generally include a built-in calculator.

Electronic Calculators

The Company manufactures a wide range of electronic calculators with a
variety of features. These include calculators designed for different uses,
including mini card, scientific, desk top, hand held, graphical and printer
calculators.

Subassemblies, Components and Other Products

In 1994, the Company began manufacturing and delivering subassemblies
consisting of LSIs bonded on PCBs utilizing advanced technological processes.
These products are used to manufacture components which are incorporated into
such products as electronic toys and games. In 1995, the Company expanded is
subassembly manufacturing business into LCD modules. These subassemblies display
information as part of such products as portable telephones, portable computers
and facsimile machines, and employ the same bonding technologies as are used for
the LSI bonded PCBs. In 1995, the Company delivered a sample run of IC card
balance readers and in 1996 began volume shipments of these products. These
readers are hand-held devices used to check information contained on the IC
cards which are being developed for use by certain major banks in Europe and
North America as an alternative to the use of cash. In 1996, the Company again
expanded the component products it offers by completing development and shipping
control panel modules for microwave ovens. These products are incorporated into
microwave ovens manufactured by a division of Sharp Corporation, which,
management believes, is a leading manufacturer of microwave ovens worldwide.

424B1 34th Page of 87 TOC 1st Previous Next ↓Bottom Just 34th

Silk Screening Services

The Company provides manufacturing and silk screening services to customers
for plastic parts, PVC products and metal parts. This service is also supplied
to other firms for incorporation into their finished products.

MANUFACTURING

Quality Control

The Company maintains strict quality control programs for its products,
including the use of total quality management ("TQM") systems. All incoming raw
materials and components are checked by the Company's quality control personnel.
During the production stage, Nam Tai's quality control personnel check all work
in process at several points in the production process. Finally, after the
assembly stage, the Company conducts random testing of finished products. In
addition, the Company provides office space at its China manufacturing facility
for representatives of its major customers to permit them to monitor production
of their products and to provide direct access to the Company's manufacturing
personnel. Manufactured products have a low level of product defect, as required
by the Company's OEM customers. When requested, Nam Tai provides a limited
warranty of six months to one year for products it manufactures. To date, claims
under the Company's warranty program have been negligible.

The Company's Hong Kong and China subsidiaries have maintained ISO 9002
Certification since December 1993 and ISO 9001 Certification since February
1996. The "ISO," or International Organization for Standardization, is a
Geneva-based organization dedicated to the development of worldwide standards
for quality management guidelines and quality assurance. ISO 9000, which was the
first quality system standard to gain worldwide recognition, requires a company
to gather, analyze, document, monitor and make improvements where needed. The
Company's receipt of ISO 9001 Certification demonstrates that the Company's
manufacturing operations meet the most demanding of the established world
standards.

Management believes sophisticated customers are increasingly requiring
their manufacturers to be ISO 9000 certified, and that manufacturers that are
not so qualified are increasingly looking to certified manufacturers like Nam
Tai rather than undertaking the expensive and time-consuming process of
qualifying their own operations.

In 1996, the Company received notice that it had been awarded the Texas
Instruments Supplier Excellence Award for commitment to excellence and support
of Texas Instruments' quality leadership. In early 1997, the Company again
received notice that it received the award for a second year. Texas Instruments,
one of the Company's largest OEM customers, has advised the Company that only a
select group of its suppliers which have demonstrated an unwavering commitment
to the principle of total quality are recognized with this award and that it was
unusual for a company to be so honored in two consecutive years.

Component Parts and Suppliers

The Company purchases over 100 different component parts from more than 30
major suppliers and is not dependent upon any single supplier for any key
component. The Company purchases components for its electronic products from
suppliers in Japan and elsewhere. Orders for components are based on forecasts
that Nam Tai receives from its OEM customers, which reflect anticipated
shipments during the production cycle for a particular model.

The major component parts purchased by the Company are ICs or "chips",
LCDs, solar cells, printer heads and batteries. The Company purchases both stock
"off the shelf" chips and custom chips, the latter being the most expensive
component parts purchased by Nam Tai. At the present time, the Company purchases
most of its chips from Toshiba Corporation, Sharp Corporation and certain of
their affiliates, although there are many additional suppliers from which the
Company could purchase chips.

LCDs are readily available from many manufacturers and the Company
currently has two major suppliers, Epson Hong Kong Ltd. and Sharp Corporation.
PCBs and other circuit boards are purchased from

424B1 35th Page of 87 TOC 1st Previous Next ↓Bottom Just 35th

circuit board manufacturers in Hong Kong and solar cells are purchased from
Matsushita Battery Industrial Company Ltd. Batteries are standard "off the
shelf" items, generally purchased in Hong Kong from agents of Japanese
manufacturers. Certain components may be subject to limited allocation by
certain of Nam Tai's suppliers. Although such shortages and allocations have not
had a material adverse effect on the Company's results of operations, there can
be no assurance that any future allocation or shortages would not have such an
effect.

In an effort to assure an adequate supply of competitively priced plastic
components, the Company maintains a minority interest in a Hong Kong supplier of
plastic parts, Deswell ("Deswell") (see "Formation of Strategic Alliances").

CUSTOMERS AND MARKETING

General

Approximate percentages of net sales to customers by geographic area, based
upon location of product delivery, are set forth below for the periods
indicated:

[Download Table]

SIX
YEAR ENDED DECEMBER MONTHS
31, ENDED
---------------------- JUNE 30,
GEOGRAPHIC AREAS 1994 1995 1996 1997
------------------------------------------- ---- ---- ---- --------

Japan...................................... 24% 34% 28% 21%
North America.............................. 33 30 34 56
Hong Kong.................................. 23 17 18 6
Europe..................................... 14 13 12 14
Other...................................... 6 6 8 3
=== === === ===
100% 100% 100% 100%
=== === === ===

The Company's Hong Kong based management personnel and sales staff are
responsible for marketing products to existing customers as well as potential
new customers. Five of the Company's major customers have done business with the
Company for over five years or more, and management believes that Nam Tai has a
stable relationship with all of its customers. The Company places great emphasis
on providing quality service to its customers and has, as a result, limited the
number of companies for which it manufactures in an effort to ensure quality
service.

424B1 36th Page of 87 TOC 1st Previous Next ↓Bottom Just 36th

Major Customers

The Company's OEM customers include the following entities. The OEM
customers either market Nam Tai's products under their own brand name or, where
no brand name is shown, incorporate the Company's products into their products:

[Enlarge/Download Table]

BRAND CUSTOMER
CUSTOMER NAME PRODUCT SINCE
--------------------------------------- ------------------ ------------------------------------- --------

A&A International (Yichi-HK) Ltd. Radio Shack Calculators 1993
Canon, Inc. Canon Personal organizers and calculators 1988
Casio Computer (Hong Kong) Casio Aluminum panels and PVC wallets 1994
Matsushita Battery Industrial Co. Ltd. -- IC card readers 1994
Nintendo, Inc. (through Sharp Corp.) -- Bonding on PCBs 1994
Optrex Corporation -- Assemblies for LCD modules 1994
Premier Precision Ltd. Citizen Silk screening and aluminum panel 1993
Sanyo Electric (H.K.) Ltd. Sanyo, Casio Silk screening 1988
Seiko Instruments Inc. Seiko, SII Personal organizers and linguistic
products 1991
Sharp Corporation Sharp Personal organizers, calculators and
control panel modules 1989
Texas Instruments Incorporated Texas Instruments Personal organizers and calculators 1989

At any given time, different customers account for a significant portion of
Nam Tai's business. Percentages of total sales by customer vary from year to
year and may fluctuate depending on the timing of production cycles for
particular products. Sales to four major customers, Sharp Corporation, Texas
Instruments Incorporated, Nintendo, Inc.(which orders through Sharp Corporation)
and Seiko Instruments Inc., aggregated approximately 90%, 92%, 90% and 91% of
the Company's total net sales during the years ended December 31, 1994, 1995 and
1996 and the six months ended June 30, 1997, respectively, as follows:

[Enlarge/Download Table]

SIX
YEAR ENDED DECEMBER MONTHS
31, ENDED
---------------------- JUNE 30,
CUSTOMER 1994 1995 1996 1997
--------------------------------------------------- ---- ---- ---- --------

Sharp Corporation.................................. 47.7% 47.9% 38.4% 29.6%
Texas Instruments Incorporated..................... 9.8 13.2 22.3 43.8
Nintendo, Inc. (through Sharp Corporation)......... 13.0 18.0 16.1 5.1
Seiko Instruments Inc.............................. 19.2 13.2 13.5 12.9
---- ---- ---- ----
89.7% 92.3% 90.3% 91.4%
==== ==== ==== ====

A number of products are made for its major customers such that the Company
is not necessarily dependent on a single product for one customer. Although
management believes that any one of the Company's customers could be replaced
with time, the loss of any one of its major customers, particularly one or more
of its top four customers, could have a material adverse effect on the Company's
business. See "Management's Discussion and Analysis of Results of Operations and
Financial Condition." While each of the companies listed above is expected to
continue to be a significant customer, the Company continually tries to lessen
its dependence on large customers through efforts to diversify its customer and
product base. There can be no assurance, however, that such efforts will prove
successful.

The Company's sales to all of its OEM customers are based on purchase
orders. Except for these purchase orders, the terms of which in a few cases are
supplemented by basic agreements dependent upon the receipt of purchase orders,
Nam Tai has no written agreements with its OEM customers. In many cases, the
Company receives letters of credit to cover the next three months of orders and
all the molds, tooling and development charges (including software design) are
charged to the account of OEM customers prior to production.

424B1 37th Page of 87 TOC 1st Previous Next ↓Bottom Just 37th

Many of Nam Tai's customers have a relationship which extends for a number
of years and consequently the Company believes its relations with these
customers are good. The Company encourages cooperation and communication with
its most important customers. In particular, senior management includes a team
of Japanese professionals who provide technical experience and work closely with
both the Company's Japanese component suppliers and its Japanese customers.
Management also believes the risk of a sudden withdrawal by any of its major
customers is diminished by: (i) the lengthy production cycle, typically over
three years for each model, which is required to produce the products sold to
customers; (ii) the fact that production cycles may begin while other products
for the same customers are in progress; and (iii) the investment in molds,
tooling and development charges (including software design) which is borne by
each OEM customer.

Sales are predominately based on standard letters of credit denominated in
either U.S. dollars or Japanese yen.

Production Scheduling

The typical cycle for a product to be manufactured and sold to an OEM
customer is three to four years, including the development period and production
period. Initially an OEM customer gathers data from its sales personnel as to
products for which there is market interest, including features and unit costs.
The OEM then contacts the Company, and possibly other prospective manufacturers,
with forecasted total production quantities and design specifications or
renderings. From that information, the Company in turn contacts its suppliers
and determines estimated component costs. The Company later advises the OEM of
the development costs, charges (including molds, tooling and development costs
such as software design) and unit cost based on the forecasted production
quantities desired during the expected production cycle. Once the Company and
the OEM customer agree to the Company's quotation for the development costs and
the unit cost, the Company begins the product development. This development
period lasts approximately nine to 15 months, or longer if software design is
included. During this time the Company completes all molds, tooling and software
required to manufacture the product with the development costs reimbursed by the
customer. Upon completion of the molds, tooling and software, the Company
produces samples of the product for the customer's quality testing, and, once
approved, commences mass production of the product.

The production period usually lasts approximately 18 to 30 months.
Typically, more advanced products have longer production runs. If total
production quantities change, the OEM customer often provides six months notice
before discontinuing orders for a product. At any point in time the Company is
in different stages of the development period and production period for the
various models it has under development or in production for OEM customers.

The Company's production is based on forecasts received from OEM customers
covering the next six month period, the first three months of which are
scheduled shipments. These forecasts are reviewed and adjusted where necessary
at the beginning of each month with confirmed orders covering the first three
months. In many cases, confirmed orders are supported by letters of credit and
may not be canceled once confirmed without the customer becoming responsible for
all costs of the remaining components included in inventory for that order.
During the years ended December 31, 1995 and 1994, the Company did not suffer a
material loss resulting from the cancellation of an OEM customer confirmed
order. However, during the course of the audit of its financial statements for
the year ended December 31, 1996, the Company confirmed that certain components
included in its raw material inventory were not likely to be used in connection
with future production, and due to the passage of time, could not be charged to
customers who would have otherwise been responsible for the reimbursement of
cost. While the Company believes that it may in the future be able to use some
portion of the components in connection with future production, the Company
elected to write-off the cost of such inventory during 1996 in the net amount of
$415,000.

Transportation

Since the Company sells its products F.O.B. Hong Kong, its customers are
responsible for the transportation of finished products from Hong Kong to their
final destination. Transportation of components

424B1 38th Page of 87 TOC 1st Previous Next ↓Bottom Just 38th

and finished products to and from Shenzhen is by truck. Component parts
purchased from Japan are generally shipped by air. To date, the Company has not
been materially affected by any transportation problems.

MARKETING PLANS FOR CHINA

The Company has Chinese government approval to sell up to 30% of the
products and parts manufactured by the Company in China. The Company does not
have any immediate plans to re-enter the China market and make domestic sales,
however, the Company continually evaluates economic and other factors in China
to determine whether doing so would be favorable to its operating results.

FORMATION OF STRATEGIC ALLIANCE

The Company strives to maintain stable sources for quality components it
uses in its manufacturing operations. Suppliers of these components have from
time to time, in periods of short supply, limited allocation of their production
among their customers. The Company believes that the formation of strategic
alliances with certain of its suppliers assists the Company to satisfy its OEM
customers' needs for timely delivery of high-quality products and permits Nam
Tai to have greater control over the quality of its suppliers' components.

Consistent with this strategy, in December 1994, the Company invested
$3,931,000 for approximately 14% of Deswell's then outstanding capital stock. In
July 1995, Deswell completed an initial public offering of its securities in the
United States and the Company's investment was diluted to approximately 10.5% of
Deswell's outstanding shares as at December 31, 1995. In July 1996, the Company
exercised warrants to purchase an additional 12,000 shares of Deswell for
$119,000. As at December 31, 1996, this investment was shown at cost and was
approximately 87% of the market value of Deswell common shares as reported on
The Nasdaq National Market at December 31, 1996. Subsequent to the end of the
year, the market price of the Deswell shares rose substantially on The Nasdaq
National Market and the Company elected to sell a portion of its investment in
Deswell, reducing its stake in Deswell to approximately 5.8% of its shares
reported outstanding at December 31, 1996. The Company realized a gain of
$2,648,000 on sales of 230,000 shares for total gross proceeds of $4,553,000. In
July 1997, the Company sold an additional 160,000 shares of Deswell for
$4,164,000, realizing an additional gain of $2,840,000, and further reducing its
stake in Deswell to approximately 1.9% of its shares reported outstanding at
June 30, 1997.

TECHNOLOGY DEVELOPMENT

Between 1984 and 1994, the Company spent an average of approximately
$360,000 per year on research and development, chiefly to advance manufacturing
technology. During the later half of this period Nam Tai concentrated on its OEM
business and expenditures fell below the average by the end of the period. At
that time the major responsibility of the Company's product design personnel was
limited to the production to the satisfaction of and in accordance with the
specifications provided by OEM customers.

Since 1995, the Company has placed increased emphasis on research and
development which provides greater service to OEM customers and assists in
design and development of future products. Research and development expenses
increased marginally to $950,000 in 1996 from $945,000 in 1995. Namtek, the
Company's software development subsidiary which began operations in early 1996
accounted for approximately 40% of the research and development expenses in 1996
and these expenses were substantially recovered from fees paid by third parties.

COMPETITION

The Company competes with numerous other companies in the contract
electronic manufacturing industry and competition is intense. Competition has
been limited by OEMs to a small number of companies who satisfy the requirements
to become approved suppliers. While individual OEM customers are likely to
prefer certain contract manufacturers, OEMs tend to order from several different
suppliers in order to reduce dependence on any one. Competition for OEM sales is
based primarily on unit price, product quality and

424B1 39th Page of 87 TOC 1st Previous Next ↓Bottom Just 39th

availability, promptness of service, reputation for reliability and OEM
confidence in the manufacturer. The Company believes that it competes favorably
in each of these areas.

EMPLOYEES

At June 30, 1997, Nam Tai employed approximately 2,170 persons on a
full-time basis, of which approximately 2,134 were working in China, 25 in Hong
Kong, and 11 in Canada. Of these, approximately 1,850 were engaged in
manufacturing, 280 were engaged in clerical, research and development and
marketing positions and the balance in supporting jobs such as security,
janitorial, and food and medical services. The Company is not a party to any
material labor contract or collective bargaining agreement. The Company has
experienced no significant labor stoppages and believes that relations with its
employees are satisfactory. The nature of its arrangement with its manufacturing
employees is such that it can increase or reduce staffing levels without
significant difficulty, cost or penalty.

An employee incentive compensation program is in place in China whereby a
regular bonus is paid to employees on the employee's return to work following
the Chinese New Year holiday. Management believes this method has contributed to
low employee turnover in the factory.

PATENTS, LICENSES AND TRADEMARKS

The Company has no patents, licenses, franchises, concessions or royalty
agreements that are material to its business as a whole. Due to rapid
technological change in the products manufactured, the Company does not believe
the absence of patents has had or will have a material impact on its business.

The Company has obtained trademark registrations in Hong Kong for the mark
"FORTEC" in connection with electronic calculators. Nam Tai has also obtained a
trademark registration in Hong Kong for the mark "SANTRON" in connection with
electronic calculators. The Company has registered the trademark "NAMTAI" in
connection with electronic calculators in Hong Kong, the United States and
Canada.

PROPERTIES

British Virgin Islands

As of January 17, 1997, the registered office of the Company was
transferred to McNamara Chambers, P.O. Box 3342, Road Town, Tortola, British
Virgin Islands. Only corporate administrative matters are conducted at such
office, through Nam Tai's registered agent, McW. Todman & Co. The Company
neither owns nor leases property in the British Virgin Islands.

Hong Kong

In February 1997 the Company leased new premises at Unit 9, 15/F., Tower 1,
China Hong Kong City, 33 Canton Road, TST, Kowloon, Hong Kong for a term of
three years. Rental is approximately $17,900 per month for the first two years,
and will be renegotiated in the third year. The Company moved its principle
executive and marketing offices into these new premises in late March 1997.

The Company owns a residential flat in Hong Kong which was purchased for
total consideration of $1,850,000. This property houses the Chief Executive
Officer of the Company and forms part of his overall compensation. See
"Management -- Compensation".

The Company also owns approximately ten acres of land in Hong Kong which
the Company plans to sell. This land has been held since 1984 and is carried on
the books of the Company at its cost of approximately $523,000. In February
1997, the Company was notified that the Hong Kong government intends to
expropriate 0.55 acres of this land and has offered compensation of
approximately $240,000. In September 1997, the Company sold approximately 3.2
acres of land at a price of $2,651,000, realizing a gain of $2,478,000.

424B1 40th Page of 87 TOC 1st Previous Next ↓Bottom Just 40th

Shenzhen, China

Nam Tai's manufacturing complex is located in Baoan County, Shenzhen,
China. It includes the original facility and Phase I of the factory expansion
which was completed in May 1996. At December 31, 1996, the total combined
capacity utilization of the original factory and Phase I of the factory
expansion was 60%.

The original facility consists of 150,000 square feet of manufacturing
space under a 15 year lease expiring in 2007. The rental rate is approximately
$32,000 per month due to increase by 20% in August 1997 and a further 20% in
August 2002.

Phase I of the complex expansion is located on 286,600 square feet of
leasehold land adjacent to the original facility. The lease for this land was
purchased for approximately $2,450,000 in 1994 and has a term of 50 years.

Construction of the approximately 437,000 square feet new facility began in
early 1995 and portions were completed in August 1995 to house new factory
employees needed to expand production at that time. Nam Tai's Phase I complex
expansion was completed on schedule in May 1996. The expanded new facility is
adjacent to the Company's original facility and consists of 160,000 additional
square feet of manufacturing space, 39,000 square feet of offices, 212,000
square feet of new dormitories, 26,000 square feet of full service cafeteria and
recreation facilities and a swimming pool. The total cost of the new factory
complex, excluding land, was approximately $21,800,000. In addition, during 1996
Nam Tai purchased $1,100,000 of new production equipment for the new factory. It
has also transferred equipment from the original factory to the new factory. In
accordance with an expansion schedule, Nam Tai intends to establish production
lines and purchase additional equipment as required by growth in the Company's
business through 1997 and into early 1998.

The Company also has a 26,000 square foot facility in Shenzhen located
approximately one mile from its complex. This contains 28 apartment units which
the Company uses to house certain of its factory managers who are married and
have families. The Company purchased this building for approximately $1,000,000,
paying the final instalment in June 1993.

During 1992, the Company purchased the development rights to a further
parcel of leasehold land in Baoan County, Shenzhen, China. The purchase price
was approximately $343,000. The land area consists of approximately 70,000
square feet of land in a developed area of commercial buildings and residences.
The purchase of the leasehold land gives Nam Tai the right to use the land for
fifty years. The Company reviewed the construction of a high rise office
building to house its corporate headquarters and subsequently decided to
concentrate on its core contract manufacturing business. In January 1997, Nam
Tai entered into a Land Development Agreement with Shenzhen Baoheng (Group) Co.
Ltd. which is expected to result in the eventual sale of the property and the
recovery of the original purchase price. There can be no assurance that the sale
will occur.

Canada

On November 1, 1995, Nam Tai Canada moved its corporate office to new
leased premises in Vancouver, British Columbia. The Company entered into a lease
for 2,637 square feet of office space at an annual rental of $26,000. The lease
expires in August 1998.

In 1995, the Company completed construction of a building in Burnaby,
British Columbia in which it intended to house both manufacturing operations and
its Canadian administration and finance office. The two-story building consists
of approximately 7,000 square feet of office space and 8,000 square feet of
manufacturing space. Construction was completed in mid 1995 at a cost of
approximately $2,400,000, including the cost of land. The prospects for
manufacturing have been re-evaluated and the property was sold in May 1997 for
approximately $1,846,00 resulting in a loss of approximately $515,000.

424B1 41st Page of 87 TOC 1st Previous Next ↓Bottom Just 41st

General

The Company believes that its existing manufacturing and office facilities
are adequate for the operation of its business for the foreseeable future.

LEGAL PROCEEDINGS

The Company is not party to any legal proceedings other than routine
litigation incidental to its business, and there are no material legal
proceedings pending with respect to the property of the Company, other than as
described below.

In September 1993, Tele-Art, Inc., a shareholder of Nam Tai, commenced an
action against the Company seeking an injunction prohibiting the Company from
proceeding with a rights offering which was contemplated at that time.
Tele-Art's application was based on claims that Nam Tai may have violated
British Virgin Islands and United States law. Among other claims, Tele-Art
asserted that the Company's rights offering was part of a scheme to enrich
directors and management of Nam Tai and dilute the interest of minority
shareholders. After a hearing, a temporary injunction obtained by Tele-Art was
discharged, permitting the Company to proceed with, and complete, its rights and
standby offerings in October 1993. Tele-Art is pursuing claims in the British
Virgin Islands against Nam Tai for damages. In November 1993, Tele-Art applied
to the Court to include the Company's directors in the proceedings, and in March
1994 the application was granted. In May 1996, the Court ordered the parties to
make discovery by exchanging lists of documents and to-date this exchange has
not occurred. The Company continues to believe that Tele-Art's claims are
without merit and plans to continue to vigorously defend them as well as to seek
from Tele-Art and its agents compensation for the damage caused by the
injunction and the proceedings that were brought to obtain it.

424B1 42nd Page of 87 TOC 1st Previous Next ↓Bottom Just 42nd

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company were as follows:

[Download Table]

NAME POSITION WITH COMPANY
------------------ ------------------------------------------------------

M.K. Koo Chairman of the Board, Chief Financial Officer and
Director
Tadao Murakami Chief Executive Officer, Vice-Chairman and Director
Hidekazu Amishima General Manager
Jerry Chang Vice General Manager
Charles Chu Director
Stephen Seung Director

M.K. KOO. Mr. Koo has served as Chairman of the Board and a Director of Nam
Tai and its predecessor companies since inception and assumed the role as Chief
Financial Officer of the Company in April 1997. Mr. Koo serves on the Company's
audit committee. Mr. Koo received his Bachelor of Laws degree from National
Taiwan University in 1970.

TADAO MURAKAMI. Mr. Murakami has served the Company in various executive
capacities since 1984. He became Secretary and a Director of the Company in
December 1989. From June 1989, he has been employed as the President of the
Company's Hong Kong subsidiary. In July 1994, Mr. Murakami succeeded Mr. Koo as
President and in June 1995 became the Company's Chief Executive Officer. Mr.
Murakami assumed the position of Vice-Chairman in January 1996 and is in charge
of the day-to-day manufacturing and marketing operations of the Company. Mr.
Murakami graduated from Japan Electronic Technology College in 1964.

HIDEKAZU AMISHIMA. Mr. Amishima joined the Company in August 1996 as Vice
General Manager and assumed the responsibility for overseeing day-to-day factory
operations of the Company's Shenzhen, China manufacturing complex as General
Manager in November 1996. From 1964 until joining the Company, Mr. Amishima was
employed by Kanda Tsushin Industrial Co. Ltd., a Japanese electronics
manufacturer.

JERRY CHANG. Mr. Chang joined the Company in 1995 and assumed the position
of Vice General Manager in late 1996. Mr. Chang is in charge of production at
the Company's Shenzhen, China manufacturing facility. Prior to joining Nam Tai
he was General Manager of R.C. Centronix Electronics (M) SDN BHD, a Malaysian
electronics manufacturer.

CHARLES CHU. Mr. Chu originally served as Secretary and a Director of the
Company from August 1987 to September 1989. He was reappointed a Director in
December 1992. Since July 1988, Mr. Chu has been engaged in the private practice
of law in Hong Kong. Mr. Chu serves on Nam Tai's audit committee. Mr. Chu
received his Bachelor of Laws degree and Post-Graduate Certificate of Laws from
the University of Hong Kong in 1980 and 1981, respectively.

STEPHEN SEUNG. Mr. Seung was appointed a Director of Nam Tai in 1995. Mr.
Seung is an attorney and Certified Public Accountant and has been engaged in the
private practice of law in New York since 1981. Mr. Seung received a B.S. degree
in Engineering from the University of Minnesota in 1969, an M.S. degree in
Engineering from the University of California at Berkeley in 1971, an MBA degree
from New York University in 1973 and a J.D. degree from New York Law School in
1979. Mr. Seung serves on Nam Tai's audit committee and acts as Nam Tai's
authorized agent in the United States.

No family relationship exists among any of the named directors, executive
officers or key employees. No arrangement or understanding exists between any
such director or officer and any other persons pursuant to which any director or
executive officer was elected as a director or executive officer of the Company.
Directors of the Company are elected each year at its annual meeting of
shareholders and serve until their successors take office or until their death,
resignation or removal. Executive officers serve at the pleasure of the Board of
Directors of the Company.

424B1 43rd Page of 87 TOC 1st Previous Next ↓Bottom Just 43rd

COMPENSATION

The aggregate amount of compensation paid by Nam Tai and its subsidiaries
during the year ended December 31, 1996 to all directors and the five highest
paid officers as a group for services in all capacities was approximately
$1,574,000, including the benefit provided in lieu of compensation for loss of
office described below. The Company also provides additional compensation in the
form of housing for Mr. Murakami in Hong Kong.

In August 1990, the Company fixed compensation for loss of office at
$500,000 for Mr. M.K. Koo and $300,000 for Mr. Tadao Murakami. The Company also
fixed the age of retirement for directors at age 65 years. At December 31, 1995,
the Company had accrued the entire $800,000.

Directors who are not employees of the Company nor any of its subsidiaries
are paid $1,000 per month for services as a director, $750 per meeting attended
in person, $500 per meeting attended by telephone. In addition they are
reimbursed for all reasonable expenses incurred in connection with services as a
director.

OPTIONS TO PURCHASE SECURITIES FROM THE COMPANY OR ITS SUBSIDIARIES.

As at September 5, 1997, the Company had outstanding options to purchase an
aggregate of 80,000 Common Shares. These options are held by Mr. M.K. Koo, were
granted under the Company's 1993 stock option plan on January 12, 1996, vest in
three equal annual installments commencing January 12, 1997, are exercisable at
$10.50 per share (which was the fair market value on the date of grant) and
expire on January 11, 2001.

CERTAIN TRANSACTIONS.

In January 1995, Nam Tai entered into an arrangement with Mr. M.K. Koo,
Chairman of the Company, requiring him to purchase a residential property in
West Vancouver, British Columbia, Canada no later than December 31, 1995 at the
higher of book value or market value. At December 29, 1995, Mr. Koo purchased
the property for book value in the amount of $2,620,445 delivering to the
Company a promissory note due on December 31, 1997. In August 1997, Mr. Koo paid
the promissory note in full to the Company.

It is the Company's policy that all future transactions between the Company
and any interested director or executive officer be approved by a majority of
the disinterested directors and on terms no more favorable than would be
available from an independent third party.

424B1 44th Page of 87 TOC 1st Previous Next ↓Bottom Just 44th

PRINCIPAL SHAREHOLDERS

The Company is not directly owned or controlled by another corporation or
by any foreign government. The following table sets forth certain information
regarding the ownership of the Company's Common Shares by (i) each person known
by the Company to be the beneficial owner of more than 5% of the outstanding
Common Shares, (ii) each of the Company's directors owing Common Shares, (iii)
all of the Company's directors and officers as a group as of the date of this
Prospectus.

[Download Table]

AMOUNT OF COMMON SHARES
BENEFICIALLY OWNED
BEFORE OFFERING(1)
-----------------------------
PERCENTAGE OF
NUMBER OF OUTSTANDING
NAME OF BENEFICIAL OWNER COMMON SHARES SHARES
--------------------------------------------------- ------------- -------------

M. K. Koo.......................................... 1,990,657 24.2%
Tadao Murakami..................................... 418,061 5.1%
Stephen Seung...................................... 12,000 *
Officers and directors as a group (5 persons)...... 2,420,718 29.5%

---------------

* Less than 1%.

(1) The maximum voting dilution to persons who do not exercise their
subscription rights in the Rights Offering is approximately 36.6%. To the
extent that Common Shareholders other than Mr. Koo and the Company's other
officers and directors do not exercise their Rights in the Rights Offering,
the control of the Company by Mr. Koo and the Company's other officers and
directors, as compared to the Company's other shareholders prior to the
Rights Offering, will be proportionately increased in such instances where
the former exercise their rights. See "The Rights Offering" and "Standby
Underwriting."

424B1 45th Page of 87 TOC 1st Previous Next ↓Bottom Just 45th

DESCRIPTION OF SECURITIES
UNITS

Each Unit offered by this Prospectus consists of one Common Share and one
Warrant, each Warrant to purchase one Common Share for $20.40. The Common Shares
and Warrants will be separately transferable immediately.

COMMON SHARES

The Company's authorized capital consists of 20,000,000 Common Shares, $.01
par value per share.

Holders of Common Shares are entitled to one vote for each whole share on
all matters to be voted upon by shareholders, including the election of
directors. Holders of Common Shares do not have cumulative voting rights in the
election of directors. All Common Shares are equal to each other with respect to
liquidation and dividend rights. Holders of Common Shares are entitled to
receive dividends if and when declared by Nam Tai's Board of Directors out of
funds legally available therefor under British Virgin Islands law. In the event
of the liquidation of the Company, all assets available for distribution to the
holders of the Common Shares are distributable among them according to their
respective holdings. Holders of Common Shares have no preemptive rights to
purchase any additional, unissued Common Shares. All of the outstanding Common
Shares are, and the Common Shares offered hereby will be when issued upon
payment of the consideration set forth in this Prospectus, duly authorized,
validly issued, fully paid and nonassessable.

The Company is organized under the laws of the British Virgin Islands.
Pursuant to the Company's Memorandum and Articles of Association and pursuant to
the laws of the British Virgin Islands, the Board of Directors may amend the
Company's Memorandum and Articles of Association without shareholder approval.
This includes, but is not limited to, amendments increasing or reducing the
authorized capital stock of the Company and increasing or reducing the par value
of its shares. In addition, the Board of Directors may approve certain
fundamental corporate transactions, including reorganizations, certain mergers
or consolidations and the sale or transfer of assets, without shareholder
approval. The ability of the Company to amend its Memorandum and Articles of
Association without shareholder approval could have the effect of delaying,
deterring or preventing a change in control of Nam Tai without any further
action by the shareholders including, but not limited to, a tender offer to
purchase the Common Shares at a premium over then-current market prices.

Under U.S. law, management, directors and controlling shareholders
generally have certain "fiduciary" responsibilities to the minority
shareholders. Shareholder action must be taken in good faith and actions by
controlling shareholders which are obviously unreasonable may be declared null
and void. The British Virgin Islands law protecting the interests of minority
shareholders differs from, and may not be as protective of shareholders as, the
law protecting minority shareholders in jurisdictions in the United States.
While British Virgin Islands law does permit a shareholder of a British Virgin
Islands company to sue its directors derivatively, i.e., in the name of and for
the benefit of the Company, and to sue Nam Tai and its directors for his or her
benefit and the benefit of others similarly situated, the circumstances in which
any such action may be brought and the procedures and defenses that may be
available in respect of any such action may result in the rights of shareholders
of a British Virgin Islands company being more limited than those rights of
shareholders in a company incorporated in a jurisdiction within the United
States.

WARRANTS

In connection with this offering, the Company has authorized the issuance
of up to 3,130,000 Warrants (including 130,000 Warrants that may be issued upon
exercise of the Standby Underwriter's Warrants and Counsel's Warrants) and has
reserved an equivalent number of Common Shares for issuance upon exercise of
such Warrants. Each Warrant will entitle the holder to purchase one Common Share
at a price of $20.40 per share from the date of issuance until November 24,
2000. The Warrants are redeemable by the Company, at $.05 per Warrant, upon 30
days' notice, at any time after the Expiration Date if the closing sale price
per Common Share for 20 consecutive trading days within the 30-day period prior
to the date notice of redemption is given equals or exceeds $25.50 per share. In
the event the Company gives notice of its intention to

424B1 46th Page of 87 TOC 1st Previous Next ↓Bottom Just 46th

redeem, a holder would be forced either to exercise his or her Warrant within 30
days of the notice of redemption or accept the redemption price.

The Warrants will be issued in registered form under a Warrant Agreement
between the Company and U.S. Stock Transfer Corporation, as warrant agent (the
"Warrant Agent"). The Common Shares underlying the Warrants, when issued upon
exercise of a Warrant, will be fully paid and nonassessable, and the Company
will pay any transfer tax incurred as a result of the issuance of Common Share
to the holder upon its exercise.

The Warrants contain provisions that protect the holders against dilution
by adjustment of the exercise price and the number of Common Shares issuable
upon exercise of the Warrants in certain events, such as stock dividends and
distributions, stock splits, recapitalizations, mergers or consolidations. The
Company is not required to issue fractional shares upon the exercise of a
Warrant. The holder of a Warrant will not possess any rights as a shareholder of
the Company until such holder exercises the Warrant. A copy of the form of
Warrant Agreement is filed as an exhibit to the Registration Statement of which
this Prospectus is a part.

Upon completion of the Standby Offering, the Company will sell, for $0.001
per warrant, (i) to the Representative warrants (the "Representative's
Warrants") to purchase up to 120,000 Units and (ii) to the Company's counsel
warrants ("Counsel's Warrants") to purchase up to 10,000 Units, each at an
exercise price equal to 120% of the Subscription Price of the Units. Such
warrants will be exercisable for a two-year period, commencing one year after
the Expiration Date.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS RESPECTING UNITS

The following summary of certain United States federal income tax aspects
is based on current law, is in general terms, and is not intended as tax advice
to any particular prospective purchaser. This discussion does not purport to
deal with all aspects of taxation that may be relevant to particular taxpayers
subject to special treatment under the federal income tax laws (including
insurance companies, tax-exempt organizations, financial institutions,
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States).

EACH PROSPECTIVE PURCHASER OF THE UNITS OFFERED HEREBY IS ADVISED TO
CONSULT HIS OR HER OWN TAX ADVISORS CONCERNING THE SPECIFIC TAX CONSEQUENCES TO
HIM OR HER OF THE PURCHASE, OWNERSHIP AND SALE OF SUCH UNITS, OR THE COMMON
SHARES OR WARRANTS COMPRISING THE UNITS, INCLUDING THE FEDERAL, STATE, LOCAL,
FOREIGN AND OTHER TAX CONSEQUENCES OF SUCH PURCHASE, OWNERSHIP OR SALE.

Basis in Units. If a shareholder exercises Rights, his or her basis in the
Units will be the cost of the Units plus any amount previously allocated to the
Rights. Each holder will allocate basis in the Units between the Common Shares
and the Warrants, which are the component parts of the Units, pro rata in
accordance with their values on the date of the exercise of the Rights.

Holding Period for Common Shares and Warrants. A shareholder exercising
Rights will commence a holding period for each component part of the Units as of
the day after his or her date of acquisition of the Units. The holding period of
the Common Shares acquired through the Warrants begins with the date of exercise
of the Warrants.

Disposition of Common Shares or Warrants. If the Common Shares and Warrants
composing Units are sold or exchanged, the holder of such Unit will recognize
gain or loss equal to the difference between the amount realized on such sale or
exchange and the tax basis of the Unit. Similarly, if either the Common Share or
the Warrant comprising the Unit is sold or exchanged (and in most cases if it is
redeemed) separately, gain or loss will be recognized in an amount equal to the
difference between the amount realized on such sale or exchange and the tax
basis of the Common Share or Warrant sold. If a Warrant expires unexercised, the
holder generally will recognize a capital loss in the amount of the holder's tax
basis for the Warrant.

All gains or losses recognized upon the sale or exchange of the Common
Shares or Warrants will be capital gain or loss, provided that the security was
a capital asset in the hands of the holder. A gain will be

424B1 47th Page of 87 TOC 1st Previous Next ↓Bottom Just 47th

short term, mid-term, long term, depending on whether the security itself was
held for less than one year (short term), between twelve and eighteen months
(mid-term), or more than eighteen months (long term), (as noted above, holders
acquiring Common Shares by exercising Warrants commence a new holding period for
those Shares). The length of the holding period may have a substantial impact on
the tax rate applied to a gain. For assets held more than five years, even lower
rates may apply: 18% on assets purchased after December 31, 2000, and 8% on
assets sold after December 31, 2000, for those in the 15% tax bracket.

The anti-dilution provisions of the Warrant Agreement require that the
number of Common Shares purchasable upon exercise of Warrants or the exercise
price of the Warrants will be adjusted in the event of certain transactions. As
to certain types of adjustments, holders of Warrants may be deemed to have
received a constructive distribution under Sections 301 and 305 of the Internal
Revenue Code of 1986, as amended, which may be taxable.

For purposes of the limitations on passive activity losses, dividends, if
any, declared on the Common Shares as well as gain from the sale or exchange of
Units, Common Shares, or Warrants, will constitute "portfolio income" rather
than income from a passive activity. Passive losses and credits generally may
not be applied against portfolio income.

TRANSFER AND WARRANT AGENT

U.S. Stock Transfer Corporation , 1745 Gardena Avenue, 2nd Floor, Glendale
CA 91204, U.S.A., is the United States transfer agent and registrar for the
Common Shares and the Warrant Agent for the Warrants. Montreal Trust Company of
Canada, 151 Front Street, 8th Floor, Toronto, Ontario, M5J 2N2, Canada is the
Canadian transfer agent and registrar for the Common Shares.

REPORTS TO SECURITY HOLDERS

The Company furnishes annual reports to shareholders which include audited
financial statements reported on by its independent accountants. The Company
will continue to comply with the periodic reporting requirements imposed on
foreign issuers by the Exchange Act. In addition, the Company furnishes
quarterly reports to shareholders containing unaudited financial statements for
each quarter of each fiscal year. The Company plans to furnish the same annual
and quarterly reports to holders of its Warrants.

U.S. FEDERAL INCOME TAXATION OF DIVIDENDS.

No reciprocal tax treaty regarding withholding exists between the United
States and the British Virgin Islands. Under current British Virgin Islands law,
dividends, interest or royalties paid by the Company to individuals are not
subject to tax as long as the recipient is not a resident of the British Virgin
Islands. The Company is not obligated to withhold any tax for payments of
dividends and shareholders receive gross dividends irrespective of their
residential or national status.

Dividends, if any, paid to any U.S. resident or citizen shareholder will be
treated as dividend income for U.S. federal income tax purposes. Such dividends
would not be eligible for the dividend exclusion allowed to individuals under
Section 1216 of the United States Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code") or for the 80% dividends-received deduction allowed to
U.S. corporations under Section 243 of the Internal Revenue Code. Various
Internal Revenue Code provisions impose special taxes in certain circumstances
on non-U.S. corporations and their shareholders. Shareholders of the Company are
urged to consult their tax advisors with regard to the applicability of any such
provisions and their own tax situation.

In addition to U.S. Federal income taxation, shareholders may be subject to
state and local taxes upon their receipt of dividends.

EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SHAREHOLDERS

There are no exchange control restrictions on payments of dividends on the
Company's Common Shares or on the conduct of the Company's operations either in
Hong Kong, where the Company's principal executive

424B1 48th Page of 87 TOC 1st Previous Next ↓Bottom Just 48th

offices are located, or the British Virgin Islands, where the company is
incorporated. Other jurisdictions in which the company conducts operations may
have various exchange controls. Dividend distribution and repatriation by the
Company's Chinese subsidiaries are regulated by Chinese laws and regulations. To
date these controls have not had and are not expected to have a material impact
on the Company's financial results. There are no material British Virgin Islands
laws which impose foreign exchange controls on the Company or that affect the
payment of dividends, interest, or other payments to nonresident holders of the
Company's securities. As to the Company's securities, British Virgin Islands law
and the Company's Memorandum and Articles of Association impose no limitations
on the right of nonresident or foreign owners to hold or vote such securities.

424B1 49th Page of 87 TOC 1st Previous Next ↓Bottom Just 49th

STANDBY UNDERWRITING

Pursuant to the terms and conditions of the Standby Underwriting Agreement
between the Company and the Standby Underwriters, for whom Joseph Charles &
Associates, Inc. is acting as Representative, the Company has agreed to sell to
the Standby Underwriters, at the purchase price described below, the number of
Units equal to 3,000,000 Units minus the number of Units purchased upon exercise
of Rights (the "Underwritten Units") and the Standby Underwriters have severally
agreed to purchase from the Company that percentage of the Underwritten Units
set forth opposite its name below:

[Enlarge/Download Table]

PERCENTAGE OF
NUMBER OF
UNDERWRITTEN
STANDBY UNDERWRITERS UNITS
------------------------------------------------------------------ ---------------------

Joseph Charles & Associates, Inc.................................. 68%
Kashner Davidson Securities Corporation........................... 20
Cohig & Associates, Incorporated.................................. 12
---
Total................................................... 100%
===

The purchase price of the Underwritten Units will be the lower of the
Subscription Price per Unit appearing on the cover page of this Prospectus or
the closing bid price per Common Share as reported at the closing of The Nasdaq
National Market on the Expiration Date; provided, however, that if the
Representative exercises the Standby Underwriters' Oversubscription Cutback as
described in "The Rights Offering," the purchase price of the Underwriter Units
will be the Subscription Price per Unit appearing on the cover page of this
Prospectus.

The Standby Underwriters will receive a fee of four percent (4%) of the
gross proceeds of the Rights and Standby Offerings, regardless of whether the
Standby Underwriters are required to purchase any Units. In addition, the
Company has agreed to pay the Representative a non-accountable expense allowance
of one percent (1%) of the gross proceeds of the Rights and Standby Offerings.

The Standby Underwriters will initially offer any Underwritten Units it
purchases to the public at the price it has paid the Company therefor as soon
after the Expiration Date of the Rights Offering as the number of Underwritten
Units can be determined. The Standby Underwriters have also agreed to act as the
agent of the Company to assist the Company in connection with the Rights
Offering. The Company has been advised by the Representative that Standby
Underwriters may offer Units to certain dealers at a concession not in excess of
$.42 per Unit.

The officers and directors of the Company have agreed, for a period of 90
days from the closing of the Standby Offering, that they will not offer, sell or
otherwise dispose of any Common Shares owned by them to the public without the
prior written consent of the Representative.

The Company has agreed to sell to the Representative, at a price of $.001
each, warrants (the "Representative's Warrants") to purchase 120,000 Units at an
exercise price per Unit equal to 120% of the Subscription Price of the Units
offered pursuant to the Rights Offering. The Representative's Warrants, which
have a term coextensive with the Warrants included in the Units offered pursuant
to the Rights Offering, are not exercisable prior to the first anniversary date
of the issuance of the Representative Warrants and are not transferable prior to
the first anniversary date of the Representative's Warrants other than to
officers or partners of the Representative and members of the selling group
and/or their officers or partners. The exercise price and the number of Common
Shares underlying the Units obtainable upon exercise of the Representative's
Warrants are, under certain circumstances, subject to adjustment pursuant to
anti-dilution provisions.

For information concerning the warrants the Company plans to sell to its
counsel upon the closing of the Standby Offering, see "Legal Matters."

The Company has agreed to indemnify the Standby Underwriters against
certain liabilities, losses and expenses, including liabilities under the
Securities Act of 1933, or to contribute to payments that the Standby
Underwriters may be required to make in respect thereof.

424B1 50th Page of 87 TOC 1st Previous Next ↓Bottom Just 50th

The Company has agreed with the Representative not to solicit Warrants
exercises other than through the Representative. Upon exercise of any Warrants,
commencing one year from the Expiration Date, the Company will pay the
Representative a fee of one percent (1%) of the aggregate exercise price, if (i)
the market price of the Company Common Shares on the date the Warrant is
exercised is greater than the then exercise price of the Warrants; (ii) the
exercise of the Warrant was solicited by a member of the National Association of
Securities Dealers, Inc.; (iii) the Warrant is not held in a discretionary
account; (iv) disclosure of compensation arrangements was made both at the time
of the offering and at the time of exercise of the Warrant; and (v) the
solicitation of the exercise of the Warrant was not in violation of Rule 10b-6
promulgated under the Exchange Act.

Prior to this offering, there has been a public market for the Common
Shares of the Company, but no public market for the Units or the Warrants. The
Subscription Price of the Units and the exercise price and other term of the
Warrants have been determined by negotiations between the Company and the
Representative. The principal factors considered in determined the Subscription
Price of the Units were the bid price of the Company Common Shares at the time
of the offering, the recent price history of the Common Shares and the general
condition of the securities markets at the time of the offering.

Certain persons participating in this offering may engage in passive market
making transactions in the Common Shares on the Nasdaq National Market in
accordance with Rule 103 of Regulation M under the Exchange Act. Rule 103
permits, upon the satisfaction of certain conditions, underwriting and selling
group members participating in a distribution that are also registered Nasdaq
market makers in the security being distributed (or a related security) to
engage in limited passive market making transactions during the period.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for the
Company by McW. Todman & Co., Road Town, Tortola, British Virgin Islands, who
has also advised the Company on all matters of British Virgin Island law
contained in this Prospectus. Wilkinson & Grist, Hong Kong, has advised the
Company on all matters of Hong Kong law contained in this Prospectus. United
States counsel to the Company is Freshman, Marantz, Orlanski, Cooper & Klein, a
law corporation, Beverly Hills, California. The Company plans to sell to
Freshman, Marantz, Orlanski, Cooper & Klein, at a price of $.001 each, warrants
(Counsel's Warrants") to purchase 10,000 Units at an exercise price per Unit
equal to 120% of the Subscription Price of the Units offered pursuant to the
Rights Offering. See "Description of Securities -- Warrants." Freshman, Marantz,
Orlanski, Cooper & Klein frequently acts as counsel to Joseph Charles &
Associates, Inc. in connection with other financings. Troop Meisenger Steuber &
Pasich, LLP, Los Angeles, California, has acted as counsel to the Standby
Underwriters with respect to certain legal matters in connection with the Rights
and Standby Offerings.

EXPERTS

The consolidated financial statements of the Company as of December 31,
1995 and 1996, and for each of the three years in the period ended December 31,
1996 included in this Prospectus have been so included in reliance upon the
report of Price Waterhouse, independent accountants, given on the authority of
said firm as experts in accounting and auditing.

424B1 51st Page of 87 TOC 1st Previous Next ↓Bottom Just 51st

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents are hereby incorporated herein by reference:

1. The Company's Annual Report on Form 20-F for the year ended
December 31, 1996 filed with the Commission on April 2, 1997; and

2. The Company's Form 8-A filed with the Commission on April 7, 1988,
its Form 8-A/A1 (Amendment No. 1) filed with the Commission on April 18,
1995 and its Form 8-A filed with the Commission on October 21, 1997.

All subsequent annual reports filed on Form 20-F, Form 40-F or Form 10-K,
and all subsequent filings on Forms 10-Q and 8-K filed by the Company with the
Commission under the Securities Exchange Act of 1934 (the "Exchange Act"), prior
to the termination of the offering, shall be deemed to be incorporated by
reference into this Prospectus. The Company may incorporate by reference into
this Prospectus certain Forms 6-K subsequently submitted to the Commission by
identifying in such forms that they are being incorporated by reference into
this Prospectus. Any statement incorporated herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus. The Company hereby undertakes to provide without charge to each
person, including any beneficial owner, to whom a copy of this Prospectus has
been delivered, upon written or oral request of such person, a copy of any or
all of the foregoing documents incorporated herein by reference (other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into such documents). Requests for such documents should be
submitted to the Company, at Suite 530 -999 West Hastings Street, Vancouver,
B.C. Canada V6C 2W2 Attention: Wendy L. Wiseman, Public Relations Secretary,
Telephone: (604) 669-7800; Fax: (604) 669-7816 toll-free telephone and fax:
(800) 661-8831.

424B1 52nd Page of 87 TOC 1st Previous Next ↓Bottom Just 52nd

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

[Enlarge/Download Table]

PAGE
-----

Report of Independent Accountants..................................................... F-1
Consolidated Balance Sheets as of December 31, 1995 and 1996.......................... F-2
Consolidated Statements of Income for the years ended December 31, 1994, 1995 and
1996................................................................................ F-3
Consolidated Statements of Changes in Shareholders' Equity for the years ended
December 31, 1994, 1995 and 1996.................................................... F-4
Consolidated Statements of Cash Flows for the years ended December 31, 1994, 1995 and
1996................................................................................ F-5
Notes to Consolidated Financial Statements............................................ F-6
Consolidated Balance Sheets as of June 30, 1996 and 1997 (Unaudited).................. F-18
Consolidated Statements of Income for the six month ended June 30, 1996 and 1997
(Unaudited)......................................................................... F-19
Consolidated Statements of Changes in Shareholders' Equity for the years ended
December 31, 1994, 1995 and 1996 and the six months ended June 30, 1997
(Unaudited)......................................................................... F-20
Consolidated Statements of Cash Flows for the six month ended June 30, 1996 and 1997
(Unaudited)......................................................................... F-21
Notes to Consolidated Financial Statements (Unaudited)................................ F-22

424B1 53rd Page of 87 TOC 1st Previous Next ↓Bottom Just 53rd

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
NAM TAI ELECTRONICS, INC.

We have audited the accompanying consolidated balance sheets of Nam Tai
Electronics, Inc. and its subsidiaries as of December 31, 1995 and 1996, and the
related statements of income, shareholders' equity, and cash flows for each of
the three years ended December 31, 1994, 1995 and 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nam Tai Electronics, Inc.
and its subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for each of the three years ended December 31,
1994, 1995 and 1996 in conformity with accounting principles generally accepted
in the United States of America.

PRICE WATERHOUSE
Certified Public Accountants

HONG KONG
March 31, 1997

F-1

424B1 54th Page of 87 TOC 1st Previous Next ↓Bottom Just 54th

NAM TAI ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF U.S. DOLLARS)

ASSETS

[Enlarge/Download Table]

AS AT DECEMBER 31,
--------------------
1995 1996
------- --------

Current assets:
Cash and cash equivalents (Note 12)................................. $10,927 $ 1,761
Term deposits....................................................... 6,435 15,980
Accounts receivable, net............................................ 17,699 16,589
Inventories (Note 3)................................................ 10,425 10,511
Prepaid expenses and deposits....................................... 1,525 1,768
------- --------
Total current assets........................................ 47,011 46,609
------- --------
Long term investment (Note 4)......................................... 3,931 4,050
------- --------
Property, plant and equipment, at cost................................ 35,365 46,751
Less: Accumulated depreciation and amortization..................... (7,730) (10,264)
------- --------
27,635 36,487
------- --------
Other assets.......................................................... 704 1,245
------- --------
Total assets.......................................................... $79,281 $ 88,391
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term bank borrowings.......................................... $ 273 $ 0
Notes payable....................................................... 5,320 5,186
Accounts payable and accrued expenses............................... 13,408 16,184
Income taxes payable................................................ 107 31
Total current liabilities................................... 19,108 21,401
------- --------
Shareholders' equity:
Common stock (Note 13).............................................. 80 78
Additional paid-in capital.......................................... 28,182 28,572
Stock option grants (Note 13(b)).................................... 467 305
Retained earnings................................................... 31,417 38,007
Foreign currency translation adjustment............................. 27 28
------- --------
Total shareholders' equity............................................ 60,173 66,990
------- --------
Total liabilities and shareholders' equity............................ $79,281 $ 88,391
======= ========
Commitments and contingencies (Note 11)

See accompanying notes to consolidated financial statements.

F-2

424B1 55th Page of 87 TOC 1st Previous Next ↓Bottom Just 55th

NAM TAI ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS OF U.S. DOLLARS EXCEPT SHARE DATA)

[Enlarge/Download Table]

YEAR ENDED DECEMBER 31,
----------------------------------------
1994 1995 1996
---------- ---------- ----------

Net sales.............................................. $ 96,564 $ 121,240 $ 108,234
Cost of sales.......................................... 79,341 98,088 86,049
---------- ---------- ----------
Gross profit......................................... 17,223 23,152 22,185
---------- ---------- ----------
Costs and expenses
Selling, general and administrative expenses........... 9,370 11,441 12,702
Research and development expenses.................... 239 945 950
---------- ---------- ----------
9,609 12,386 13,652
---------- ---------- ----------
Income from operations................................. 7,614 10,766 8,533
(Loss) on disposal of fixed assets................... (48) 0 (123)
Other income -- net (Note 5)......................... 761 225 1,253
Interest expense..................................... (129) (161) (89)
---------- ---------- ----------
Income from consolidated companies before income taxes
and minority interests............................... 8,198 10,830 9,574
Income tax (expense) benefit (Note 8).................. (173) 589 (158)
---------- ---------- ----------
8,025 11,419 9,416
Minority interests in subsidiaries..................... 74 0 0
---------- ---------- ----------
Net income............................................. $ 8,099 $ 11,419 $ 9,416
========== ========== ==========
Earnings per share..................................... $ 1.09 $ 1.40 $ 1.16
========== ========== ==========
Weighted average Common Shares outstanding and common
stock equivalents (Note 1)........................... 7,459,570 8,171,750 8,142,131
========== ========== ==========

See accompanying notes to consolidated financial statements.

F-3

424B1 56th Page of 87 TOC 1st Previous Next ↓Bottom Just 56th

NAM TAI ELECTRONICS, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS OF U.S. DOLLARS EXCEPT SHARES OUTSTANDING)

[Enlarge/Download Table]

COMMON SHARES FOREIGN
-------------------- ADDITIONAL STOCK CURRENCY TOTAL
SHARES PAID-IN OPTION RETAINED TRANSLATION SHAREHOLDERS'
OUTSTANDING AMOUNT CAPITAL GRANTS EARNINGS ADJUSTMENT EQUITY
----------- ------ ---------- ------- -------- ----------- ------------

Balance at December 31, 1993...... 6,498,825 $ 65 $ 15,355 $ 690 $12,084 $ (32) $ 28,162
Shares issued on exercise of
options......................... 9,000 -- 69 (21) -- -- 48
Options cancelled................. -- -- -- (38) -- -- (38)
Warrants cancelled................ -- -- (657) -- -- -- (657)
Shares issued on exercise of
warrants........................ 1,485,202 15 12,878 -- -- -- 12,893
Net income........................ -- -- -- -- 8,099 -- 8,099
Dividends paid.................... -- -- -- -- (65) -- (65)
Foreign currency translation
adjustments..................... -- -- -- -- -- 7 7
--------- --- ------- ----- ------- ---- -------
Balance at December 31, 1994...... 7,993,027 $ 80 $ 27,645 $ 631 $20,118 $ (25) $ 48,449
Shares issued on exercise of
options......................... 70,150 -- 537 (161) -- -- 376
Options cancelled................. -- -- -- (3) -- -- (3)
Net income........................ -- -- -- -- 11,419 -- 11,419
Dividends paid.................... -- -- -- -- (120) -- (120)
Foreign currency translation
adjustments..................... -- -- -- -- -- 52 52
--------- --- ------- ----- ------- ---- -------
Balance at December 31, 1995...... 8,063,177 $ 80 $ 28,182 $ 467 $31,417 $ 27 $ 60,173
Share buy-back program............ (273,500) (3) -- -- (2,583) -- (2,586)
Shares issued on exercise of
options......................... 47,550 1 390 (91) -- -- 300
Options cancelled................. -- -- -- (71) -- -- (71)
Net income........................ -- -- -- -- 9,416 -- 9,416
Dividends paid.................... -- -- -- -- (243) -- (243)
Foreign currency translation
adjustments..................... -- -- -- -- -- 1 1
--------- --- ------- ----- ------- ---- -------
Balance at December 31, 1996...... 7,837,227 $ 78 $ 28,572 $ 305 $38,007 $ 28 $ 66,990
========= === ======= ===== ======= ==== =======

See accompanying notes to consolidated financial statements.

F-4

424B1 57th Page of 87 TOC 1st Previous Next ↓Bottom Just 57th

NAM TAI ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF U.S. DOLLARS)

[Enlarge/Download Table]

YEAR ENDED DECEMBER 31,
----------------------------------
1994 1995 1996
-------- -------- --------

Cash flows from operating activities:
Net income............................................... $ 8,099 $ 11,419 $ 9,416
-------- -------- --------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation............................................. 2,063 2,612 2,676
Gain on release of deferred credit to income............. (594) -- --
Loss on disposal of property, plant and equipment........ 48 -- 123
Gain on disposal of product lines........................ (129) -- --
Minority interests in subsidiaries....................... (74) -- --
Other items.............................................. 9 -- --
Changes in current assets and liabilities:
(Increase) decrease in accounts receivable............ (1,857) (5,955) 1,110
(Increase) in inventories............................. (2,414) (1,338) (86)
(Increase) in prepayments and deposits................ (337) (517) (243)
Increase (decrease) in notes payable.................. (4,244) (797) (134)
Increase in accounts payable and accrued expenses..... 2,917 2,876 2,776
(Decrease) in income taxes payable.................... (140) (519) (176)
-------- -------- --------
Total adjustments................................ 3,736 (3,638) 6,146
-------- -------- --------
Net cash provided by operating activities.................. 11,835 7,781 15,562
-------- -------- --------
Cash flows from investing activities:
Proceeds from disposal of property, plant and
equipment............................................. 12 12 --
Proceeds from disposal of product lines.................. 270 -- --
Additions to property, plant and equipment............... (10,673) (13,696) (11,650)
Additions to other assets................................ (199) (379) (541)
Term deposits............................................ -- (6,035) (9,545)
Purchase of long term investment......................... (3,931) -- (119)
-------- -------- --------
Net cash used in investing activities...................... (14,521) (20,098) (21,855)
Cash flows from financing activities:
Share buy-back program................................... -- -- (2,583)
Increase (decrease) in short-term bank loans and
overdraft............................................. 173 (290) (273)
(Distributed to) received from minority interests........ (41) -- --
Additional shares issued (net)........................... 12,284 373 226
Dividends paid........................................... (65) (120) (243)
-------- -------- --------
Net cash (used in) provided by financing activities........ 12,351 (37) (2,873)
-------- -------- --------
Net increase (decrease) in cash and cash equivalents....... 9,665 (12,354) (9,166)
Cash and cash equivalents at beginning of period........... 13,616 23,281 10,927
-------- -------- --------
Cash and cash equivalents at end of period................. $ 23,281 $ 10,927 $ 1,761
======== ======== ========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Interest paid.............................................. $ 131 $ 186 $ 89
======== ======== ========
Income taxes paid.......................................... $ 313 $ 47 $ 234
======== ======== ========

See accompanying notes to consolidated financial statements.

F-5

424B1 58th Page of 87 TOC 1st Previous Next ↓Bottom Just 58th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The preparation of 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 financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Principles of consolidation

The consolidated financial statements include the financial statements of
Nam Tai Electronics, Inc. ("the Company") and all its subsidiaries. Intercompany
accounts and transactions have been eliminated on consolidation. Minority
interest is recognized in respect of earnings of less than wholly-owned
subsidiaries. The details of the Company's subsidiaries are described in Note 9.

Deferred credit

When a subsidiary is purchased, the excess of the fair value of the net
assets acquired over the purchase price is recorded as a reduction to
non-current assets with any remainder being recorded as a deferred credit. If
the purchase price exceeds the fair value of net assets acquired, the excess
cost is recorded as goodwill. Any goodwill or deferred credit which may result
is amortized over its estimated useful life, not to exceed forty years. The
remaining deferred credit of $594,000 at September 30,1994 was credited to
income in 1994 as the subsidiary to which the deferred credit related commenced
liquidation procedures and was insolvent.

Inventories

Inventories are stated at the lower of cost and market value. Cost is
determined on the first-in, first-out basis.

Property, plant and equipment

Property, plant and equipment are recorded at cost and include interest on
funds borrowed to finance construction in Canada. Capitalized interest was nil,
$12,650 and $12,650 for the years ended December 31, 1994, 1995 and 1996
respectively. The cost of major improvements and betterments is capitalized
whereas the cost of maintenance and repairs is expensed in the year incurred.

All land in Hong Kong is owned by the government which leases the land at
public auction to nongovernmental entities. With the exception of those leases
which expire after June 30, 1997 and before June 30, 2047 with no right of
renewal, the Sino-British Joint Declaration extends the terms of all currently
existing land leases for another 50 years beyond June 30, 1997. Thus, all of the
Company's land leaseholds in Hong Kong are considered to be purchased long-term
assets. The cost of such land leaseholds is amortized on the straight-line basis
over the respective terms of the leases.

All land in the People's Republic of China ("PRC") is owned by the
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 land leaseholds and are amortized on
the straight line basis over the respective term of the right to use the land.

F-6

424B1 59th Page of 87 TOC 1st Previous Next ↓Bottom Just 59th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

Depreciation and amortization rates computed using the straight-line method
are as follows:

[Download Table]

CLASSIFICATION RATE
----------------------------------------------------------------- --------

Long-term leasehold buildings.................................... 2%-4.5%
Freehold buildings............................................... 3.3%-4%
Furniture and fixtures........................................... 18%-25%
Machinery and equipment.......................................... 9%-25%
Molds and tools.................................................. 18%-25%
Motor vehicles................................................... 18%-25%
Leasehold improvements........................................... 18%-33%

During 1996, management reassessed the useful life of certain plant and
equipment assets and changed their estimated useful life from four to five years
effective January 1, 1996. As a result of this change, the 1996 depreciation
expense was $860,000 less than it would have been had an estimated life of four
years been used.

Per share amounts

The per share amounts in the consolidated statements of income have been
computed based on the weighted average number of Common Shares and common stock
equivalents outstanding during each period. Common stock equivalents include the
number of shares that would be issued from the exercise of in- the-money stock
options reduced by the assumed number of shares that could be purchased from the
proceeds based on the average market price of the Company's Common Stock.

The weighted average number of shares outstanding for the years ended
December 31, 1994, 1995 and 1996 were 6,934,098, 8,018,252 and 8,040,497,
respectively. Common stock equivalents for the years ended December 31, 1994,
1995 and 1996 were 525,472, 153,498 and 101,634, respectively. Fully diluted
earnings per share do not differ materially from the undiluted figures.

Foreign currency translations

The financial statements have been stated in United States dollars, the
official currency used in the British Virgin Islands (the Company's place of
incorporation). Although the operating facilities are located in Hong Kong and
the PRC, the United States dollar is the currency of the primary economic
environment in which the Company's consolidated operations are conducted. The
exchange rate between the Hong Kong dollar and the United States dollar has been
pegged (HK$7.80 to US$1.00) since October 1983.

All transactions in currencies other than functional currencies during the
year are translated at the exchange rates existing on the respective transaction
dates. Related accounts payable or receivable existing at the balance sheet date
denominated in currencies other than functional currencies are translated at the
exchange rates existing on that date. Exchange differences arising in these
cases are dealt with in the statement of income.

The financial statements of all subsidiaries with functional currencies
other than the United States dollar are translated in accordance with Statement
of Financial Accounting Standards No. 52 "Foreign Currency Translation". With
the exception of Namtai Electronic (Shenzhen) Co. Ltd. ("NTES"), Zastron Plastic
& Metal Products (Shenzhen) Ltd. ("Zastron") and Shenzhen Namtek Co. Ltd.
("Namtek"), which are companies incorporated in the PRC, 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. Also with the exception of the PRC companies, all
exchange differences arising from translation of subsidiaries' financial
statements are dealt with as a separate component of equity.

F-7

424B1 60th Page of 87 TOC 1st Previous Next ↓Bottom Just 60th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

As NTES, Zastron and Namtek act as production centers for the Company, the
Company controls their operations and the majority of their transactions are
made in Hong Kong dollars. Therefore, the Hong Kong dollar has been determined
to be the functional currency of NTES, Zastron and Namtek. Accordingly, all
monetary assets and liabilities are translated at the rates of exchange ruling
at the balance sheet date, non-monetary assets and liabilities are translated at
the historical rate and all income and expense items are translated at the
average rates of exchange over the year and all translation adjustments
resulting from the conversion of NTES, Zastron and Namtek's financial statements
to Hong Kong dollars are taken to the income statements. Exchange rates used to
translate and remeasure transactions and balances of NTES, Zastron and Namtek
are the rates quoted by the Bank of China.

Income taxes

The Company provides for all taxes based on income whether due at year end
or estimated to become due in future periods but based on profits earned to
date. However, under the current tax legislation in the People's Republic of
China ("PRC"), the Company has reasonable grounds to believe that income taxes
paid in respect of any year would be refunded after the profits earned in that
year are reinvested in the business. Accordingly, any PRC tax paid during the
year is recorded as an amount receivable at year end. Deferred income taxes are
provided to recognize the effect on the difference between the financial
statement and income tax bases of assets and liabilities.

Staff retirement plan costs

The Company's contributions to the staff retirement plan (Note 6) are
charged to the income statements as incurred.

Deferred Compensation Arrangement costs

For the years 1990 to 1995, the liability relating to the Deferred
Compensation Arrangement (Note 7) was provided ratably over the future
employment periods of the beneficiaries of the plan until their dates of
retirement or earlier departure from the Company. At December 31, 1995, the
remaining balance was fully provided for. Consequently, at December 31, 1996, no
provision was taken.

Cash and cash equivalents

Cash equivalents include certificates of deposit having a maturity date of
three months or less upon acquisition.

Currency contracts

The Company enters into forward currency contracts in its management of
foreign currency exposures. Since the forward currency contracts are not
intended to hedge an identifiable foreign currency commitment, generally
accepted accounting principles require that the contracts are marked to market
with the net realized or unrealized gains or losses recognized in other income.
(Note 5).

Long term investment

Long term investment is stated at the lower of cost and market value.

Research and development costs

Research and development costs relating to the development of new products
and processes, including significant improvements and refinements to existing
products are expensed as incurred. The amounts charged against income were
$239,139, $945,333 and $949,941 for the years ended December 31, 1994, 1995 and
1996 respectively.

F-8

424B1 61st Page of 87 TOC 1st Previous Next ↓Bottom Just 61st

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

Stock options

Financial Accounting Standards Board ("FASB") Statement No. 123 allows
companies which have stock-based compensation arrangements with employees to
adopt a new fair-value basis of accounting for stock options and other equity
instruments, or to continue to apply the existing accounting rules under
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees", but with additional financial statement disclosure. The Company
plans to continue to account for stock-based compensation arrangements under APB
Opinion No. 25 and provides additional disclosure to that effect in Note 13 (b).

2. FINANCIAL INSTRUMENTS

The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of its cash equivalents, term deposits and trade
receivables.

The Company's cash equivalents and term deposits are high-quality deposits
placed with banking institutions with high credit ratings. This investment
policy limits the Company's exposure to concentration of credit risk.

The trade receivable balances largely represent amounts due from the
Company's principal customers who are generally international organizations with
high credit ratings. As a consequence, concentrations of credit risk are
limited. Letters of credit are the principal security obtained to support lines
of credit or negotiated contracts when the financial strength of a customer is
not considered sufficient.

All of the Company's significant financial instruments at December 31, 1996
are reported in current assets or current liabilities in the consolidated
balance sheet at carrying amounts which approximate their fair value.

From time to time, the Company hedges its currency exchange risk, which
primarily arises from materials purchased in currencies other than the United
States dollar, through the purchase and sale of forward exchange contracts. Such
contracts typically allow the Company to buy or sell currency at a fixed price
for up to one year, but the Company normally books forward six months. At
December 31, 1996, there was no open forward currency contract and at December
31, 1995, the open forward contracts amounted to $60,000 at face value.

3. INVENTORIES

Inventories consist of (in thousands):

[Download Table]

AS AT DECEMBER 31,
-------------------
1995 1996
------- -------

Finished goods........................................... $ 1,927 $ 576
Work-in-progress......................................... 1,690 2,548
Raw materials............................................ 6,808 7,387
------- -------
$10,425 $10,511
======= =======

4. LONG TERM INVESTMENT

F-9

424B1 62nd Page of 87 TOC 1st Previous Next ↓Bottom Just 62nd

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

In July 1996, the Company elected to exercise warrants which increased its
holdings by 12,000 shares to 489,370 or 10.6% of the outstanding common shares
of Deswell Industries, Inc.

In February 1997, the Company sold 225,000 shares of Deswell Industries
Inc. realizing a net gain of $2,564,500.

5. OTHER INCOME -- NET

Other income -- net consists of (in thousands):

[Enlarge/Download Table]

AS AT DECEMBER 31,
----------------------------
1994 1995 1996
------ ------ ------

Foreign exchange gains......................................... $ 68 $ 52 $ 20
Interest income................................................ 591 1,548 1,092
Bank charges................................................... (364) (490) (406)
Release of deferred credit (Note 1(c))......................... 594 -- --
Offering costs written off..................................... -- (334) --
Full provision for Deferred Compensation Arrangement (Note
7)........................................................... -- (560) --
Special bonus.................................................. -- (376) --
Miscellaneous income (expenses)................................ (128) 385 547
----- ------ ------
$ 761 $ 225 $1,253
===== ====== ======

6. STAFF RETIREMENT PLAN

The Company maintains staff retirement plans (defined contribution pension
plans) which cover certain of its employees. The cost of the Company's
contributions amounted to $67,034, $80,545 and $92,399 for the years ended
December 31, 1994, 1995 and 1996 respectively.

7. DEFERRED COMPENSATION ARRANGEMENT

In August 1990, the Company agreed to provide compensation in the event of
loss of office, for whatever reason, for two officers. The amount of
compensation to be ultimately provided is $500,000 for Mr. Koo and $300,000 for
Mr. Murakami. A provision of $40,000 was made in each of the years ended
December 31, 1995 and 1994. At December 31, 1995, the balance of the deferred
compensation arrangement, which amounted to $560,000, was provided for. For the
year ended December 31, 1996, pursuant to an agreement between Mr Koo and the
Company, an amount of $450,000 payable to Mr M.K. Koo was transferred from the
provision for compensation for loss of office and applied against an amount
receivable from him. (Note 10).

8. INCOME TAXES

Under the current British Virgin Islands law, the Company's income is not
subject to taxation. Subsidiaries, primarily operating in Hong Kong and the PRC,
are subject to income tax as described below.

The provision for current income taxes of the subsidiaries operating in
Hong Kong has been calculated by applying the current rate of taxation of 16.5%
(1995: 16.5% and 1994: 16.5%) to the estimated taxable income earned in or
derived from Hong Kong during the period.

Deferred tax, where applicable, is provided under the liability method at
the rate of 16.5% (1995: 16.5%, 1994: 16.5%), being the effective Hong Kong
statutory income tax rate applicable to the ensuing financial year, on the
difference between the financial statement and income tax bases of assets and
liabilities.

F-10

424B1 63rd Page of 87 TOC 1st Previous Next ↓Bottom Just 63rd

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

The basic corporate tax rate for Foreign Investment Enterprises ("FIE's")
in the PRC, such as NTES, Zastron and Namtek, is currently 33% (30% state tax
and 3% local tax). However, because NTES, Zastron and Namtek are located in the
designated Special Economic Zone ("SEZ") of Shenzhen and are involved in
production operations, they qualify for a special reduced state tax rate of 15%.
In addition, the local tax authorities in the Shenzhen SEZ are not currently
assessing any local tax. Since NTES, Zastron, and Namtek have agreed to operate
for a minimum of ten years in the PRC, a two year tax holiday from the first
profit making year is available, following which in the third through fifth
years there is a 50% reduction to 7.5%. In any event, for FIE's such as NTES,
Zastron and Namtek which export 70% or more of the production value of their
products, a reduction in the tax rate is available; in all cases apart from
years in which a tax holiday is available, there is an overall minimum tax rate
of 10%. In 1990 and 1991, NTES qualified for a tax holiday; tax was payable at
the rate of 7.5% on the assessable profits of NTES in 1992, 1993 and 1994, and
10% in 1995 and 1996. In 1992 and 1993, Zastron qualified for a tax holiday; tax
was payable at the rate of 7.5% on the assessable profits of Zastron in 1994,
1995 and 1996. Namtek in 1996 was in its first year of operation and qualified
for a two year tax holiday.

An FIE whose foreign investor directly reinvests its share of profits
obtained from that FIE in establishing or expanding an export-oriented or
technologically advanced enterprise in the PRC for a minimum period of five
years may obtain a refund of the taxes already paid on those profits. The
Company has gained reasonable assurance through previous experience that when
profits are reinvested, PRC taxes paid are refunded in full in the ensuing year.

NTES qualified for such refunds of its 1993, 1994 and 1995 taxes as a
result of reinvesting its profits in those years. Zastron qualified for such
refund of its 1994 taxes as a result of reinvesting its profits in that year.

The tax refunds received were as follows:

[Download Table]

TAXATION DATE
COMPANY YEAR PAID REFUNDED RECEIVED
--------------------------- -------- -------- -------- ----------------

NTES....................... 1993 $212,000 $212,000 Nov 1994
1994 $714,000 $714,000 Aug 1995
1995 $918,727 $918,727 Dec 1996

Zastron.................... 1994 $ 68,000 $ 68,000 Aug 1995
1995 $ 30,967 -- Refund awaited

The Company intends to reinvest profits earned in 1996 by NTES and Zastron
and accordingly no provision for PRC taxes was made in 1996.

The current and deferred components of the income tax (expense) benefit
appearing in the income statement are as follows (in thousands):

[Download Table]

YEAR ENDED DECEMBER 31,
------------------------
1994 1995 1996
----- ---- -----

Current tax......................................... $(173) $589 $(158)
Deferred tax........................................ -- -- --
------ ----- ------
$(173) $589 $(158)
====== ===== ======

F-11

424B1 64th Page of 87 TOC 1st Previous Next ↓Bottom Just 64th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

A reconciliation of the tax (expense) benefit to the amount computed by
applying the current tax rate to the income from continuing operations before
taxes in the consolidated statements of income is as follows (in thousands
except tax rate):

[Enlarge/Download Table]

YEAR ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
------- ------- -------

Hong Kong statutory tax rate.................................. 16.5% 16.5% 16.5%
Income tax expense at current tax rate on income from
consolidated companies before income taxes and minority
interests................................................... $(1,353) $(1,787) $(1,580)
Tax (expense) benefit arising from items which are not
(allowable) assessable for tax purposes:
Gain on write-off of deferred credit which is not taxable
under Hong Kong tax law.................................. 98 0 0
Effect of difference between PRC and Hong Kong tax applied
to PRC taxable income.................................... 873 1,659 1,449
Reversal of subsidiary's tax provision...................... 0 314 0
Income tax refund........................................... 270 391 0
Other....................................................... (61) 12 (27)
------- ------- -------
$ (173) $ 589 $ (158)
======= ======= =======

No income tax arose in the United States of America in any of the periods
presented.

In prior years, the purchase cost of patents and trademarks and certain
expenses incurred by a subsidiary, Nam Tai Supplies Ltd., were claimed as tax
deductible expenses. The Hong Kong Inland Revenue Department ("IRD") has taken
issue on the deductibility of these expenses and issued revised assessments to
recover taxes of $995,000. In January 1994, the IRD petitioned the Hong Kong
court to wind up the subsidiary for non-payment of assessed taxes. A winding up
order was made on March 9, 1994, and the Official Receiver was appointed as
liquidator. In 1995, the tax provision of $314,000 for this subsidiary was
reversed as the subsidiary is in the process of liquidation and is insolvent.

9. INVESTMENT IN SUBSIDIARIES

[Enlarge/Download Table]

PERCENTAGE OF
OWNERSHIP
-------------
COUNTRY OF DECEMBER 31,
CONSOLIDATED SUBSIDIARIES INCORPORATION PRINCIPAL ACTIVITY 1995 1996
---------------------------------------------- ------------- --------------------- ---- ----

Nam Tai Electronic & Electrical Products
Ltd......................................... Hong Kong Trading 100% 100%
Nam Tai Electronics (Canada) Ltd.............. Canada Services 100% 100%
Namtai Electronic (Shenzhen) Co. Ltd.......... PRC Manufacturing 100% 100%
Zastron Plastic & Metal Products (Shenzhen)
Ltd......................................... PRC Manufacturing 100% 100%
Shenzhen Namtek Co. Ltd....................... PRC Software Development -- 100%

In February 1995, NTEE invested $9,546,000 in NTES by reinvesting NTES's
1994 net income. This increased NTEE's total investment in NTES to $24,490,000.
In April 1996, NTEE invested a further $9,165,000 in NTES by reinvesting NTES's
1995 net income. This increased NTEE's total investment in NTES to $33,655,000.

At December 31, 1995, NTEE's investment in Zastron was $3,100,000 and Nam
Tai Electronics, Inc's investment in Nam Tai Electronics (Canada) was $256,000.
At December 31, 1996, NTEE's investment in

F-12

424B1 65th Page of 87 TOC 1st Previous Next ↓Bottom Just 65th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

Zastron and Namtek were $3,512,000 and $225,000, respectively. Nam Tai
Electronics, Inc.'s investment in Nam Tai Electronics (Canada) Ltd. was
$256,000.

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 purchase of materials
by these companies, the payment of dividends and the removal of dividends from
the PRC. However, the Company believes that such restrictions will not have a
material effect on the group's liquidity or cash flows.

10. RELATED PARTY TRANSACTIONS

In June 1995, the Company completed the construction of a residential
property pursuant to an agreement dated January 13, 1995. As the property had
not been sold to a third party by December 31, 1995, Mr. M.K. Koo, the Chairman
of the Company, purchased the property for book value of $2,620,000 being the
higher of the market value and book value of the property as required by the
contract. At December 31, 1995 this amount was included in accounts receivable.
In March 1996, Mr. M.K. Koo elected to apply $450,000 available from his
compensation for loss of office against the account receivable. The balance
outstanding at December 31, 1996 amounting to $2,120,000 is repayable by Mr.
M.K. Koo on or before December 31, 1997.

11. COMMITMENTS AND CONTINGENCIES

Pursuant to the August 17, 1992 land purchase and development agreement
between NTES and Baoan County City Development Foundation, NTES is required to
construct a multi-purpose business building of seven floors or more in Baoan
City, Shenzhen, PRC. The Company is looking for a partner to develop, manage and
finance the entire project. To date, the Company has invested $488,000 to
purchase the land and in capitalized design fees. Subsequent to December 31,
1996 the Company signed an agreement with Shenzhen Baoheng (Group) Co. Ltd., a
Chinese company, which will be responsible for the design, construction and
marketing of this project.

Lease commitments

At December 31, 1996, there were annual commitments under operating leases
which relate to land and buildings as follows (in thousands):

[Download Table]

1997................................................................ $ 891
1998................................................................ 698
1999................................................................ 469
2000................................................................ 443
2001 and thereafter................................................. $3,174
------
$5,675
======

The Company has been advised that Tele-Art, Inc., a shareholder of the
Company, intends to pursue claims in a court in the British Virgin Islands for
damages allegedly suffered as a result of the rights offering completed in 1993.
Management believes that the claim is without merit and will vigorously defend
it and believes that the outcome of the case will not have a significant effect
on the financial statements.

F-13

424B1 66th Page of 87 TOC 1st Previous Next ↓Bottom Just 66th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

12. BANKING FACILITIES

General banking facilities amounted to $49,200,000 at December 31, 1996,
(December 31, 1995 -- $38,202,000), with interest charged based on the Hong Kong
prime rate for Hong Kong dollar transactions and banks' cost of funds rate for
transactions in other currencies (effectively 8.50% and 0.50%, respectively at
December 31, 1996).

The total amount of banking facilities utilized as at December 31, 1996 was
$7,629,000 (December 31, 1995 -- $10,216,000).

The notes payable, which include trust receipts, shipping guarantees and
discounted bills, may not agree to utilized banking facilities due to a timing
difference between the Company receiving the goods and the bank issuing the
trust receipt to cover financing of the purchase. The Company recognizes the
outstanding letter of credit as a note payable when the goods are received, even
though the bank may not have issued the trust receipt. However, this will not
affect the total bank facility utilization, as an addition to trust receipts
will be offset by a reduction in the same amount of outstanding letters of
credit.

[Enlarge/Download Table]

DECEMBER 31,
-------------------
1995 1996
------- -------

Outstanding letters of credit............................................ $ 7,724 $ 3,688
Usance bills pending maturity............................................ 2,159 619
Discounted bills......................................................... -- --
Trust receipts and shipping guarantees................................... -- 3,322
Short-term bank borrowings............................................... 273 --
Forward exchange contracts............................................... 60 --
------- -------
Total banking facilities utilized........................................ 10,216 7,629
Less:
Outstanding letters of credit.......................................... (7,724) (3,688)
Short-term bank borrowings............................................. (273) --
Forward Contracts...................................................... (60) --
Plus:
Goods received but trust receipts not issued by the bank............... 3,161 1,245
------- -------
Notes payable per balance sheets......................................... $ 5,320 $ 5,186
======= =======

Discounted bills normally have a term to maturity of 30 days. Trust
receipts normally have terms from 90 to 100 days. The interest rate for the
above facilities is normally prime plus 3/4% for all currencies.

In the third quarter of 1995, the Company's bankers agreed to release the
charges on the pledged assets and to provide the banking facilities with only
the corporate guarantee from Nam Tai Electronics, Inc., the parent company, and
its undertaking not to pledge any assets to any banks without the prior consent
of the Company's bankers. Throughout 1996, banking facilities bore the corporate
guarantee of Nam Tai Electronics, Inc.

13. COMMON SHARES

Authorized shares

In July 1994, the Board of Directors increased the number of authorized
Common Shares to 20,000,000. The par value of each Common Share is $0.01.

F-14

424B1 67th Page of 87 TOC 1st Previous Next ↓Bottom Just 67th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

Stock options

In August 1993, the Board of Directors approved a stock option plan which
authorized the issuance of 300,000 vested options to key employees of the
Company at an exercise price of $5.35. The options expire in September 1998.
Because the option's exercise price was less than the market value of the
Company's Common Shares on the date of grant, the Company recorded compensation
expense of $690,000 reflecting the excess of the fair value of the underlying
stock over the exercise price. In December 1993 and January 1996, the option
plan was amended and the maximum number of shares to be issued pursuant to the
exercise of options granted was increased to 650,000 and 1,000,000 respectively.

A summary of stock option activity is as follows:

[Enlarge/Download Table]

NUMBER
OF OPTION PRICE
OPTIONS PER SHARE
-------- --------------------------------

Outstanding at December 31, 1993................... 300,000 $5.35
Exercised........................................ (9,000) $5.35
Granted.......................................... 365,000 $11.00
Cancelled........................................ (40,750) $5.35 & $11.00
--------
Outstanding at December 31, 1994................... 615,250 $5.35 & $11.00
Reissued......................................... 40,750 $11.00
Exercised........................................ (70,150) $5.35
Cancelled........................................ (25,000) $11.00
Reissued......................................... 10,000 $11.375
--------
Outstanding at December 31, 1995................... 570,850 $5.35, $11.00 & $11.375
Exercised........................................ (47,550) $5.35 & $11.00
Granted.......................................... 170,000 $10.50
Cancelled........................................ (156,000) $5.35 & $11.00
--------
Outstanding at December 31, 1996................... 537,300 $5.35, $10.50, $11.00 & $11.375

Had compensation cost for the Company's stock option plan been determined
based on the fair value at the grant dates for awards under those plans
consistent with the method of FASB No. 123, the Company's net income and
earnings per share would have been reduced to the pro forma amounts indicated
below:

[Enlarge/Download Table]

1995 1996
------ -----

Net Income As Reported................................................. 11,419 9,416
Pro forma................................................... 11,340 9,081
Earnings per share As Reported................................................. 1.40 1.16
Pro forma................................................... 1.39 1.12

The weighted-average fair value of options granted during the year was
$4.52 (1995 -- $4.03), using the Black-Scholes option-pricing model based on the
following assumptions:

[Enlarge/Download Table]

$11.00 OPTIONS $11.375 OPTIONS $10.50 OPTIONS
-------------- --------------- --------------

Risk-free interest rate............... 6.0% 5.4% 5.3%
Expected life......................... 8/01/98 12/01/98 1/12/00
Expected volatility................... 44.0% 49.0% 48.0%
Expected dividends.................... .030 .030 .030

F-15

424B1 68th Page of 87 TOC 1st Previous Next ↓Bottom Just 68th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

Share buy-back program

During 1996, the Company bought back 273,500 Common Shares of its
outstanding capital stock at an average price of $9.46 per share.

14. BUSINESS SEGMENT INFORMATION

The Company operates principally in the consumer electronic products
industry. The following is a summary of sales, income from continuing operations
and assets by geographic area (in thousands):

[Enlarge/Download Table]

YEAR ENDED DECEMBER 31,
-----------------------------------
1994 1995 1996
-------- --------- --------

Net sales from operations within Hong Kong:
Unaffiliated customers.................................. $ 95,470 $ 119,417 $105,170
Related parties......................................... -- -- --
Intersegment sales...................................... -- 353 --
-------- --------- ---------
95,470 119,770 105,170
People's Republic of China:
Unaffiliated customers.................................. 810 1,445 3,064
Intersegment sales...................................... 92,612 112,804 95,669
-------- --------- ---------
93,422 114,249 98,733
Canada:
Unaffiliated customers.................................. 284 378 --
Intersegment eliminations................................. (92,612) (113,157) (95,669)
-------- --------- ---------
Total net sales................................. $ 96,564 $ 121,240 $108,234
======== ========= =========
Income (loss) from continuing operations within:
-- People's Republic of China........................... 7,491 10,448 10,339
-- Hong Kong............................................ 2,020 4,196 2,921
-- Canada............................................... (1,412) (3,225) (3,844)
-------- --------- ---------
Net income................................................ $ 8,099 $ 11,419 $ 9,416
======== ========= =========
Identifiable assets by geographic area:
-- People's Republic of China........................... 19,116 42,416 44,975
-- Hong Kong............................................ 23,463 25,505 24,564
-- Canada............................................... 23,708 11,360 18,852
-------- --------- ---------
Total assets.................................... $ 66,287 $ 79,281 $ 88,391
======== ========= =========

F-16

424B1 69th Page of 87 TOC 1st Previous Next ↓Bottom Just 69th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

Intersegment sales arise from the transfer of finished goods between
subsidiaries operating in different areas. These sales are generally at
estimated market prices.

[Download Table]

YEAR ENDED DECEMBER 31,
---------------------------------
1994 1995 1996
------- -------- --------

Net sales to customers by geographic area:
-- North America.......................... $31,686 $ 36,730 $ 36,595
-- Japan.................................. 23,547 41,532 30,483
-- Hong Kong.............................. 21,855 20,544 19,404
-- Europe................................. 13,831 16,003 13,187
-- Other.................................. 5,645 6,431 8,565
------- -------- --------
Total net sales................... $96,564 $121,240 $108,234
======= ======== ========

The Company had sales to four major customers, each individually exceeding
10% of total sales in 1996 as follows:

[Download Table]

CUSTOMER
--------------------------------------------

A........................................... $46,032 $ 58,124 $ 41,569
B (through customer A)...................... 12,600 21,805 17,395
C........................................... 9,421 16,022 24,138
D........................................... 18,573 15,962 14,642
------- -------- --------
$86,626 $111,913 $ 97,744
======= ======== ========

F-17

424B1 70th Page of 87 TOC 1st Previous Next ↓Bottom Just 70th

NAM TAI ELECTRONICS, INC.

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS OF U.S. DOLLARS)

[Enlarge/Download Table]

AS AT JUNE 30,
--------------------
1996 1997
------- --------

ASSETS
Current assets:
Cash and cash equivalents (Note 12)................................... $ 1,670 $ 2,263
Term deposits......................................................... 15,191 28,794
Accounts receivable, net.............................................. 13,881 23,342
Inventories (Note 3).................................................. 9,091 9,594
Prepaid expenses and deposits......................................... 5,325 2,194
------- --------
Total current assets.......................................... 45,158 66,187
------- --------
Long term investment (Note 4)........................................... 3,931 2,157
------- --------
Property, plant and equipment, at cost.................................. 40,747 44,665
Less: Accumulated depreciation and amortization....................... (9,106) (12,378)
------- --------
31,641 32,287
------- --------
Other assets............................................................ 821 1,702
------- --------
Total assets.................................................. $81,551 $102,333
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable (Note 12)............................................... $ 5,574 $ 3,123
Accounts payable and accrued expenses................................. 11,642 17,523
Dividend payable...................................................... 243 --
Income taxes payable.................................................. 124 263
------- --------
Total current liabilities..................................... 17,583 20,909
------- --------
Shareholders' equity:
Common stock (Note 13)................................................ 81 81
Additional paid-in capital............................................ 28,572 30,725
Stock option grants (Note 13(b))...................................... 371 47
Retained earnings..................................................... 34,916 50,544
Foreign currency translation adjustment............................... 28 27
------- --------
Total shareholders' equity.................................... 63,968 81,424
------- --------
Total liabilities and shareholders' equity.................... $81,551 $102,333
======= ========

Commitments and contingencies (Note 11)

See accompanying notes to consolidated financial statements.

F-18

424B1 71st Page of 87 TOC 1st Previous Next ↓Bottom Just 71st

NAM TAI ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS OF U.S. DOLLARS EXCEPT SHARE DATA)

[Enlarge/Download Table]

SIX MONTHS ENDED JUNE 30,
-------------------------
1996 1997
---------- ----------

Net sales........................................................... $ 50,242 $ 71,596
Cost of sales....................................................... 40,299 51,756
--------- ---------
Gross profit...................................................... 9,943 19,840
--------- ---------
Costs and expenses
Selling, general and administrative expenses...................... 6,323 7,664
Research and development expenses................................. 412 541
--------- ---------
6,735 8,205
--------- ---------
Income from operations.............................................. 3,208 11,635
Loss on disposal of fixed assets.................................. -- (634)
Other income -- net (Note 5)...................................... 617 2,611
Interest expense.................................................. (19) (37)
--------- ---------
Income from consolidated companies before income taxes and minority
interests......................................................... 3,806 13,575
Income tax expense (Note 8)......................................... (64) (242)
--------- ---------
Net income.......................................................... $ 3,742 $ 13,333
========= =========
Earnings per share.................................................. $ 0.46 $ 1.68
========= =========
Weighted average Common Shares outstanding and common stock
equivalents (Note 1(f))........................................... 8,212,954 7,947,421
========= =========

See accompanying notes to consolidated financial statements.

F-19

424B1 72nd Page of 87 TOC 1st Previous Next ↓Bottom Just 72nd

NAM TAI ELECTRONICS, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
(IN THOUSANDS OF U.S. DOLLARS EXCEPT SHARES OUTSTANDING)

[Enlarge/Download Table]

COMMON SHARES FOREIGN TOTAL
-------------------- ADDITIONAL STOCK CURRENCY SHARE-
SHARES PAID-IN OPTION RETAINED TRANSLATION HOLDERS'
OUTSTANDING AMOUNT CAPITAL GRANTS EARNINGS ADJUSTMENT EQUITY
----------- ------ ---------- ------- -------- ---------- -----------

Balance at December 31, 1995....... 8,063,177 $ 80 $ 28,182 $ 467 $31,417 $ 27 $60,173
Shares issued on exercise of
options.......................... 47,550 $ 1 $ 390 (91) -- -- 300
Options cancelled.................. -- -- -- (5) -- -- (5)
Net income......................... -- -- -- -- 3,742 -- 3,742
Dividends paid..................... -- -- -- -- (243) -- (243)
Foreign currency translation
adjustments...................... -- -- -- -- -- 1 1
--------- --- ------- ---- ------- --- -------
Balance at June 30, 1996........... 8,110,727 $ 81 $ 28,572 $ 371 $34,916 $ 28 $63,968
========= === ======= ==== ======= === =======
Share buy-back program............. (273,500) (3) -- -- (2,583) -- (2,586)
Shares issued on exercise of
options.......................... -- -- -- -- -- -- --
Options cancelled.................. -- -- -- (66) -- -- (66)
Net income......................... -- -- -- -- 5,674 -- 5,674
Foreign currency translation
adjustments...................... -- -- -- -- -- -- --
--------- --- ------- ---- ------- --- -------
Balance at December 31, 1996....... 7,837,227 $ 78 $ 28,572 $ 305 $38,007 $ 28 $66,990
========= === ======= ==== ======= === =======
Share buy-back program............. (1,000) -- -- -- (10) -- (10)
Shares issued on exercise of
options.......................... 229,400 $ 3 $ 2,153 (258) -- -- 1,898
Net income......................... -- -- -- -- 13,333 -- 13,333
Dividends paid..................... -- -- -- -- (786) -- (786)
Foreign currency translation
adjustments...................... -- -- -- -- -- (1) (1)
--------- --- ------- ---- ------- --- -------
Balance at June 30, 1997........... 8,065,627 $ 81 $ 30,725 $ 47 $50,544 $ 27 $81,424
========= === ======= ==== ======= === =======

See accompanying notes to consolidated financial statement.

F-20

424B1 73rd Page of 87 TOC 1st Previous Next ↓Bottom Just 73rd

NAM TAI ELECTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS OF U.S. DOLLARS)

[Enlarge/Download Table]

SIX MONTHS ENDED
JUNE 30,
--------------------
1996 1997
------- -------

Cash flows from operating activities:
Net income............................................................ $ 3,742 $13,333
------- -------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation....................................................... 1,382 2,434
Loss on disposal of property, plant and equipment.................. -- 634
Gain on disposal of long term investment........................... -- (2,648)
Changes in current assets and liabilities:
(Increase) decrease in accounts receivable....................... 3,818 (6,462)
Decrease in inventories.......................................... 1,334 917
(Increase) in prepayments and deposits........................... (3,800) (426)
(Decrease) increase in notes payable............................. 254 (2,063)
Increase (decrease) in accounts payable and accrued expenses..... (1,766) 1,302
Increase in dividends payable.................................... 243 --
Increase in income taxes payable................................. 17 232
------- -------
Total adjustments............................................. 1,482 (6,080)
------- -------
Net cash provided by operating activities............................... 5,224 7,253
------- -------
Cash flows from investing activities:
Proceeds from disposal of property, plant and equipment............... -- 1,791
Proceeds from disposal of long term investment........................ -- 4,541
Additions to property, plant and equipment............................ (5,387) (952)
Additions to other assets............................................. (117) (457)
Term deposits......................................................... (8,756) (12,814)
------- -------
Net cash used in investing activities................................... (14,260) (7,891)
------- -------
Cash flows from financing activities:
Share buy-back program................................................ -- (10)
Decrease in short-term bank loans and overdraft....................... (273) --
Additional shares issued, net......................................... 295 1,899
Dividends paid........................................................ (243) (749)
------- -------
Net cash provided by (used in) financing activities..................... (221) 1,140
------- -------
Net increase (decrease) in cash and cash equivalents.................... (9,257) 502
Cash and cash equivalents at beginning of period........................ 10,927 1,761
------- -------
Cash and cash equivalents at end of period.............................. $ 1,670 $ 2,263
======= =======
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Interest paid........................................................... $ 19 $ 37
======= =======
Income taxes paid....................................................... $ 46 $ 10
======= =======

See accompanying notes to consolidated financial statements.

F-21

424B1 74th Page of 87 TOC 1st Previous Next ↓Bottom Just 74th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN U.S. DOLLARS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

In the opinion of management, the financial statements at June 30, 1996 and
1997, and for each of the six-month periods then ended, reflect all normal and
recurring adjustments necessary for a fair presentation of the financial
position and results of operations for each of the periods presented. The
results of operations, cash flows and statements of changes in shareholders
equity for such periods are not necessarily indicative of results to be expected
for the full year.

Principles of consolidation

Deferred credit

Inventories

Inventories are stated at the lower of cost and market value. Cost is
determined on the first-in, firstout basis.

Property, plant and equipment

Property, plant and equipment are recorded at cost and include interest on
funds borrowed to finance construction in Canada. Capitalized interest was nil
for the six months ended June 30, 1997 and for the six months ended June 30,
1996. The cost of major improvements and betterments is capitalized whereas the
cost of maintenance and repairs is expensed in the year incurred.

F-22

424B1 75th Page of 87 TOC 1st Previous Next ↓Bottom Just 75th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

Depreciation and amortization rates computed using the straight-line method
are as follows:

[Download Table]

CLASSIFICATION RATE
-------------- ---------

Long-term leasehold buildings.................................. 2% - 4.5%
Freehold buildings............................................. 3.3% - 4%
Furniture and fixtures......................................... 18% - 25%
Machinery and equipment........................................ 9% - 25%
Molds and tools................................................ 18% - 25%
Motor vehicles................................................. 18% - 25%
Leasehold improvements......................................... 18% - 33%

Per share amounts

The per share amounts in the consolidated statements of income have been
computed based on the weighted average number of Common Shares and common stock
equivalents outstanding during each period. Common stock equivalents include the
number of shares that would be issued from the exercise of in-the-money stock
options reduced by the assumed number of shares that could be purchased from the
proceeds based on the average market price of the Company's Common Stock.

The weighted average number of shares outstanding for the six months ended
June 30, 1997 and June 30, 1996 were 7,947,421 and 8,212,954 respectively.
Common stock equivalents for the six months ended June 30, 1997 and June 30,
1996 were 88,051 and 137,500, respectively. Fully diluted earnings per share do
not differ materially from the undiluted figures.

Foreign currency translations

The financial statements of all subsidiaries with functional currencies
other than the United States dollar are translated in accordance with Statement
of Financial Accounting Standards No. 52 "Foreign Currency Translation". With
the exception of Namtai Electronic (Shenzhen) Co. Ltd. ("NTES"), Zastron Plastic
& Metal Products (Shenzhen) Ltd. ("Zastron") and Shenzhen Namtek Co. Ltd.
("amtek"), which are companies incorporated in the PRC, 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. Also with the exception of the PRC companies, all
exchange differences arising from translation of subsidiaries' financial
statements are dealt with as a separate component of equity.

F-23

424B1 76th Page of 87 TOC 1st Previous Next ↓Bottom Just 76th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

Income taxes

Staff retirement plan costs

The Company's contributions to the staff retirement plan (Note 6) are
charged to the income statements as incurred.

Deferred Compensation Arrangement costs

Cash and cash equivalents

Cash equivalents include certificates of deposit having a maturity date of
three months or less upon acquisition.

Currency contracts

Long term investment

Long term investment is stated at the lower of cost and market value.

Research and development costs

F-24

424B1 77th Page of 87 TOC 1st Previous Next ↓Bottom Just 77th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

against income were $239,139, $945,333 and $949,941 for the years ended December
31, 1994, 1995 and 1996, respectively. The amount charged against income was
$412,210 and $540,772 for the six months ended June 30, 1996 and June 30,1997,
respectively.

Stock options

Financial Accounting Standards Board ("AFASB") Statement No. 123 allows
companies which have stock-based compensation arrangements with employees to
adopt a new fair-value basis of accounting for stock options and other equity
instruments, or to continue to apply the existing accounting rules under
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," but with additional financial statement disclosure. The Company
plans to continue to account for stock-based compensation arrangements under APB
Opinion No. 25 and provides additional disclosure to that effect in Note 13(b).

2. FINANCIAL INSTRUMENTS

The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of its cash equivalents, term deposits and trade
receivables.

3. INVENTORIES

Inventories consist of (in thousands):

[Download Table]

AS AT JUNE 30,
-----------------
1996 1997
------ ------

Finished goods............................................. $ 565 $1,079
Work-in-progress........................................... 2,152 2,190
Raw materials.............................................. 6,374 6,325
------ ------
$9,091 $9,594
====== ======

F-25

424B1 78th Page of 87 TOC 1st Previous Next ↓Bottom Just 78th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

4. LONG TERM INVESTMENT

In December 1994, the Company purchased 14.04% or 477,370 of the
outstanding common shares of Deswell Investment Holdings Limited ("Deswell"), a
supplier of plastic parts to the Company, for a total consideration of
$3,931,284. In 1995, Deswell changed its name to Deswell Industries, Inc. and
completed its initial public offering which reduced the Company's ownership to
approximately 10.5% at December 31, 1995. In July 1996, the Company elected to
exercise warrants which increased its holdings by 12,000 shares to 489,370 or
10.6% of the outstanding common shares of Deswell Industries, Inc.

For the six months ended June 30, 1997, the Company sold 230,000 shares of
Deswell Industries Inc. realizing a net gain of $2,648,100.

5. OTHER INCOME -- NET

Other income -- net consists of (in thousands):

[Enlarge/Download Table]

SIX MONTHS ENDED
JUNE 30
----------------
1996 1997
----- ------

Interest income.......................................................... $ 603 $ 496
Bank charges............................................................. (195) (189)
Dividend income.......................................................... -- 104
Gain on disposal of long term investment................................. -- 2,648
Miscellaneous (expenses) income.......................................... 209 (448)
----- ------
$ 617 $2,611
===== ======

6. STAFF RETIREMENT PLAN

The Company maintains staff retirement plans (defined contribution pension
plans) which cover certain of its employees. The cost of the Company's
contributions amounted to $45,701 and $38,717 for the six months ended June 30,
1996 and the six months ended June 30,1997, respectively.

7. DEFERRED COMPENSATION ARRANGEMENT

In August 1990, the Company agreed to provide compensation in the event of
loss of office, for whatever reason, for two officers. The amount of
compensation to be ultimately provided is $500,000 for Mr. Koo and $300,000 for
Mr. Murakami. A provision of $40,000 was made in each of the years ended
December 31, 1994 and 1995. At December 31, 1995, the balance of the deferred
compensation arrangement, which amounted to $560,000, was provided for. For the
year ended December 31, 1996, pursuant to an agreement between Mr Koo and the
Company, an amount of $450,000 payable to Mr M.K. Koo was transferred from the
provision for compensation for loss of office and applied against an amount
receivable from him.(Note 10).

8. INCOME TAXES

The provision for current income taxes of the subsidiaries operating in
Hong Kong has been calculated by applying the current rate of taxation of 16.5%
(16.5% for the six months ended June 30, 1996) to the estimated taxable income
earned in or derived from Hong Kong during the period.

F-26

424B1 79th Page of 87 TOC 1st Previous Next ↓Bottom Just 79th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

Deferred tax, where applicable, is provided under the liability method at
the rate of 16.5% (16.5% for the six months ended June 30, 1996), being the
effective Hong Kong statutory income tax rate applicable to the ensuing
financial year, on the difference between the financial statement and income tax
bases of assets and liabilities.

In 1990 and 1991, NTES qualified for a tax holiday; tax was payable at the
rate of 7.5% on the assessable profits of NTES in 1992, 1993 and 1994, and 10%
in 1995, 1996 and 1997. In 1992 and 1993, Zastron qualified for a tax holiday;
tax was payable at the rate of 7.5% on the assessable profits of Zastron in
1994, 1995, 1996 and 1997. Namtek in 1996 was in its first year of operation and
qualified for a two year tax holiday. An FIE whose foreign investor directly
reinvests its share of profits obtained from that FIE in establishing or
expanding an export-oriented or technologically advanced enterprise in the PRC
for a minimum period of five years may obtain a refund of the taxes already paid
on those profits. The Company has gained reasonable assurance through previous
experience that when profits are reinvested, PRC taxes paid are refunded in full
in the ensuing year.

The tax refunds received were as follows:

[Download Table]

TAXATION
COMPANY YEAR PAID REFUNDED DATE RECEIVED
-------- -------- -------- -------- --------------

NTES.... 1993 $212,000 $212,000 Nov 1994
1994 $714,000 $714,000 Aug 1995
1995 $918,727 $918,727 Dec 1996
1996 $844,530 -- Refund awaited
Zastron.. 1994 $ 68,000 $ 68,000 Aug 1995
1995 $ 30,967 -- Refund awaited

The Company intends to reinvest profits earned in 1997 by NTES and Zastron
and accordingly no provision for PRC taxes was made for the six months ended
June 30, 1997 (nil for the six months ended June 30,1996).

F-27

424B1 80th Page of 87 TOC 1st Previous Next ↓Bottom Just 80th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

The current and deferred components of the income tax (expense) benefit
appearing in the income statement are as follows (in thousands):

[Download Table]

SIX MONTHS
ENDED JUNE 30,
--------------
1996 1997
---- -----

Current tax................................................ $(64) $(242)
Deferred tax............................................... -- --
---- -----
$(64) $(242)

[Enlarge/Download Table]

SIX MONTHS ENDED
JUNE 30,
-----------------
1996 1997
----- -------

Hong Kong statutory tax rate.............................................. 16.5% 16.5%
Income tax expense at current tax rate on income from consolidated
companies before income taxes and minority interests.................... $(628) $(2,240)
Tax (expense) benefit arising from items which are not (allowable)
assessable for tax purposes:
Effect of difference between PRC and Hong Kong tax applied to PRC taxable
income.................................................................. 570 1,931
Other................................................................... (6) 67
----- -------
$ (64) $ (242)
===== =======

No income tax arose in the United States of America in any of the periods
presented.

9. INVESTMENT IN SUBSIDIARIES

[Enlarge/Download Table]

PERCENTAGE OF
OWNERSHIP
AS AT JUNE
30,
CONSOLIDATED COUNTRY OF PRINCIPAL -------------
SUBSIDIARIES INCORPORATION ACTIVITY 1996 1997
------------ ------------- -------------- ---- ----

Nam Tai Electronic & Electrical Products Hong Kong Trading 100% 100%
Ltd.........................................
Nam Tai Electronics (Canada) Ltd.............. Canada Services 100% 100%
Namtai Electronic (Shenzhen) Co. Ltd.......... PRC Manufacturing 100% 100%
Zastron Plastic & Metal Products (Shenzhen) PRC Manufacturing 100% 100%
Ltd.........................................
Shenzhen Namtek Co. Ltd....................... PRC Software -- 100%
Development

F-28

424B1 81st Page of 87 TOC 1st Previous Next ↓Bottom Just 81st

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

NTES to $33,655,000. In April 1997, NTEE invested a further $8,345,000 in NTES
by reinvesting NTES's 1996 net income. This increased NTEE's total investment in
NTES to $42,000,000.

At June 30, 1996, NTEE's investment in Zastron and Namtek were $3,512,000
and $225,000 respectively, Nam Tai Electronics, Inc's investment in Nam Tai
Electronics (Canada) was $256,000. At June 30, 1997, NTEE's investment in
Zastron and Namtek were $3,512,000 and $225,000 respectively. Nam Tai
Electronics, Inc.'s investment in Nam Tai Electronics (Canada) Ltd. was
$256,000.

10. RELATED PARTY TRANSACTIONS

In June 1995, the Company completed the construction of a residential
property pursuant to an agreement dated January 13, 1995. As the property had
not been sold to a third party by December 31, 1995, Mr. M.K. Koo, the Chairman
of the Company, purchased the property for book value of $2,620,000 being the
higher of the market value and book value of the property as required by the
contract. At December 31, 1995 this amount was included in accounts receivable.
In March 1996, Mr M.K. Koo elected to apply $450,000 available from his
compensation for loss of office against the account receivable. In August 1997,
Mr. Koo reversed his election regarding the compensation for loss of office and
paid the Company the gross amount outstanding of $2,570,000

11. COMMITMENTS AND CONTINGENCIES

Pursuant to the August 17, 1992 land purchase and development agreement
between NTES and Baoan County City Development Foundation, NTES is required to
construct a multi-purpose business building of seven floors or more in Baoan
City, Shenzhen, PRC. The Company is looking for a partner to develop, manage and
finance the entire project. To date, the Company has invested $488,000 to
purchase the land and in capitalized design fees. On January 13, 1997, the
Company signed an agreement with Shenzhen Baoheng (Group) Co. Ltd., a Chinese
company, which will be responsible for the design, construction and marketing of
this project.

Lease commitments

At June 30, 1997, there were annual commitments under operating leases
which relate to land and buildings as follows (in thousands):

[Download Table]

1997 (from July to December)...................................... $ 439
1998.............................................................. 698
1999.............................................................. 469
2000.............................................................. 443
2001 and thereafter............................................... 3,174
------
$5,223
======

F-29

424B1 82nd Page of 87 TOC 1st Previous Next ↓Bottom Just 82nd

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

completed in 1993. Management believes that the claim is without merit and will
vigorously defend it and believes that the outcome of the case will not have a
significant effect on the financial statements.

12. BANKING FACILITIES

General banking facilities amounted to $49,200,000 at June 30, 1997 (as at
June 30, 1996 - $55,200,000) with interest charged based on the Hong Kong prime
rate for Hong Kong dollar transactions and banks' cost of funds rate for
transactions in other currencies (effectively 8.50% and 0.50%, respectively at
June 30, 1997).

The total amount of banking facilities utilized as at June 30, 1997 was
$5,220,000. (as at June 30, 1996 -- $9,865,000).

[Enlarge/Download Table]

AS AT JUNE 30,
-----------------
1996 1997
------- -------

Outstanding letters of credit (including usance bills
pending maturity)........................................................ $ 7,685 2,577
Trust receipts and shipping guarantees..................................... 2,180 2,643
Short-term bank borrowings................................................. -- --
Forward exchange contracts................................................. -- --
------- -------
Total banking facilities utilized.......................................... 9,865 5,220
Less:
Outstanding letters of credit............................................ (6,329) (2,577)
Short-term bank borrowings............................................... -- --
Forward contracts........................................................ -- --
Plus:
Goods received but trust receipts not issued by the bank................. 2,038 480
------- -------
Notes payable per balance sheets........................................... $ 5,574 $ 3,123
======= =======

In the third quarter of 1995, the Company's bankers agreed to release the
charges on the pledged assets and to provide the banking facilities with only
the corporate guarantee from Nam Tai Electronics, Inc., the parent company, and
its undertaking not to pledge any assets to any banks without the prior consent
of the Company's bankers. Throughout 1996 and for the six months ended June 30,
1997, banking facilities bore the corporate guarantee of Nam Tai Electronics,
Inc.

13. COMMON SHARES

Authorized shares

In July 1994, the Board of Directors increased the number of authorized
Common Shares to 20,000,000. The par value of each Common Share is $0.01.

F-30

424B1 83rd Page of 87 TOC 1st Previous Next ↓Bottom Just 83rd

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

Stock options

A summary of stock option activity is as follows:

[Enlarge/Download Table]

NUMBER
OF
OPTIONS
PER
SHARE OPTION PRICE
-------- ------------------------

Outstanding at December 31, 1993.......................... 300,000 $5.35
Exercised............................................... (90,000) $5.35
Granted................................................. 365,000 $11.00
Cancelled............................................... (40,750) $5.35 & $11.00
--------
Outstanding at December 31, 1994.......................... 615,250 $5.35 & $11.00
Reissued................................................ 40,750 $11.00
Exercised............................................... (70,150) $5.35
Cancelled............................................... (25,000) $11.00
Reissued................................................ 10,000 $11.375
--------
Outstanding at December 31, 1995.......................... 570,850 $5.35, $11.00, $11.375
Exercised............................................... (47,550) $5.35 & $11.00
Granted................................................. 170,000 $10.50
Cancelled............................................... (49,500) $5.35 & $11.00
--------
Outstanding at June 30, 1996.............................. 643,000 $5.35, $10.50,
$11.00 & $11.375
Exercised............................................... 0 $5.35, & $11.00, $11.375
Granted................................................. 0
Cancelled............................................... (106,500) $5.35, $10.50, $11.00
--------
Outstanding at December 31, 1996.......................... 537,300 $5.35, $10.50, $11.00 &
$11.375
Exercised............................................... (229,400) $5.35, $11.00, $11.375
Granted................................................. 0
Cancelled............................................... (97,300) $5.35, $10.50, $11.00
--------
Outstanding at June 30, 1997.............................. 210,600 $5.35, $10.50, $11.00
========

F-31

424B1 84th Page of 87 TOC 1st Previous Next ↓Bottom Just 84th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

[Enlarge/Download Table]

SIX MONTHS ENDED
JUNE 30,
------------------
1996 1997
------ -------

Net Income (in thousands) As reported..................................... $3,742 $13,333
Pro forma....................................... 3,407 13,077
Earnings per share As reported..................................... 0.46 1.68
Pro forma 0.41 1.68

The weighted-average fair value of options granted in 1996 was $4,52
(1995 -- $4.03), using the Black-Scholes option-pricing model based on the
following assumptions:

[Enlarge/Download Table]

$11.00 OPTIONS $11.375 OPTIONS $10.50 OPTIONS
-------------- --------------- --------------

Risk-free interest rate............... 6.0% 5.4% 5.3%
Expected life......................... 8/01/98 12/01/98 1/12/00
Expected volatility................... 44.0% 49.0% 44.0%
Expected dividends.................... 0.30 0.30 0.30

Share buy-back program

During the six months ended June 30, 1997, the Company bought back 1,000
Common Shares of its outstanding capital stock at an average price of $9.49 per
share.

F-32

424B1 85th Page of 87 TOC 1st Previous Next ↓Bottom Just 85th
NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

14. BUSINESS SEGMENT INFORMATION

The Company operates principally in the consumer electronic products
industry. The following is a summary of sales, income from continuing operations
and assets by geographic area (in thousands):

[Download Table]

SIX MONTHS ENDED
JUNE 30,
---------------------
1996 1997
-------- --------

Net sales from operations within Hong Kong:
Unaffiliated customers................................. $ 49,352 $ 70,496
Intersegment sales..................................... -- --
-------- --------
49,352 70,496
People's Republic of China:
Unaffiliated customers............................... 890 1,100
Intersegment sales................................... 45,675 66,217
-------- --------
67,317 46,565
Canada:
Unaffiliated customers............................... -- --
Intersegment eliminations............................ (45,675) (66,217)
-------- --------
Total net sales.............................. $ 50,242 $ 71,596
======== ========
Income (loss) from continuing operations within:
-- People's Republic of China.......................... 3,921 10,326
-- Hong Kong........................................... 2,009 2,505
-- Canada.............................................. (2,188) 502
-------- --------
Net income............................................. $ 3,742 $ 13,333
======== ========
Identifiable assets by geographic area:
-- People's Republic of China.......................... $ 42,981 $ 42,034
-- Hong Kong........................................... 21,735 25,658
-- Canada.............................................. 16,835 34,641
-------- --------
Total assets................................. $ 81,551 $102,333
======== ========

Intersegment sales arise from the transfer of finished goods between
subsidiaries operating in different areas. These sales are generally at
estimated market prices.

[Download Table]

SIX MONTHS ENDED
JUNE 30,
-------------------
1996 1997
------- -------

Net sales to customers by geographic area:
-- North America......................................... $17,145 $40,395
-- Japan................................................. 15,073 15,035
-- Hong Kong............................................. 6,923 4,409
-- Europe................................................ 7,585 9,811
-- Other................................................. 3,516 1,946
------- -------
Total net sales................................ $50,242 $71,596
======= =======

F-33

424B1 86th Page of 87 TOC 1st Previous Next ↓Bottom Just 86th

NAM TAI ELECTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(IN U.S. DOLLARS)

The Company has sales to four major customers, each individually exceeding
10% of total sales for six months ended June 30, 1997 as follows:

[Download Table]

CUSTOMER
---------------------------------------------------------

A........................................................ $22,045 $21,221
B (through customer A)................................... 8,920 3,713
C........................................................ 10,399 31,388
D........................................................ 4,721 9,236
------- -------
$46,085 $65,558
======= =======

F-34

424B1 Last Page of 87 TOC 1st Previous Next ↓Bottom Just 87th

======================================================

NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, OR BY THE STANDBY UNDERWRITERS. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------

TABLE OF CONTENTS

[Download Table]

PAGE
-----

Available Information................. 2
Enforceability of Civil Liabilities... 2
Prospectus Summary.................... 3
Risk Factors.......................... 7
The Rights Offering................... 12
Use of Proceeds....................... 17
Dividend Policy....................... 17
Price Range of Common Shares.......... 18
Capitalization........................ 19
Selected Consolidated Financial
Data................................ 20
Management's Discussion and Analysis
of
Results of Operations and Financial
Condition........................... 21
Business.............................. 31
Management............................ 42
Principal Shareholders................ 44
Description of Securities............. 45
Standby Underwriting.................. 49
Legal Matters......................... 50
Experts............................... 50
Incorporation of Certain Documents by
Reference........................... 51
Index to Consolidated Financial
Statements.......................... 52

=============================================

======================================================
[NamTai Logo]
3,000,000 UNITS,
EACH UNIT CONSISTING OF
ONE COMMON SHARE AND
ONE REDEEMABLE COMMON SHARE
PURCHASE WARRANT
------------------------

PROSPECTUS
------------------------

JOSEPH CHARLES &
ASSOCIATES, INC.
OCTOBER 30, 1997
======================================================

424B1	1st Page of 87	TOC	↑Top	Previous	Next	↓Bottom	Just 1st

424B1	2nd Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 2nd

424B1	3rd Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 3rd

424B1	4th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 4th

424B1	5th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 5th

424B1	6th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 6th

424B1	7th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 7th

424B1	8th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 8th

424B1	9th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 9th

424B1	10th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 10th

424B1	11th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 11th

424B1	12th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 12th

424B1	13th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 13th

424B1	14th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 14th

424B1	15th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 15th

424B1	16th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 16th

424B1	17th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 17th

424B1	18th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 18th

424B1	19th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 19th

424B1	20th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 20th

424B1	21st Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 21st

424B1	22nd Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 22nd

424B1	23rd Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 23rd

424B1	24th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 24th

424B1	25th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 25th

424B1	26th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 26th

424B1	27th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 27th

424B1	28th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 28th

424B1	29th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 29th

424B1	30th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 30th

424B1	31st Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 31st

424B1	32nd Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 32nd

424B1	33rd Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 33rd

424B1	34th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 34th

424B1	35th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 35th

424B1	36th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 36th

424B1	37th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 37th

424B1	38th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 38th

424B1	39th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 39th

424B1	40th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 40th

424B1	41st Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 41st

424B1	42nd Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 42nd

424B1	43rd Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 43rd

424B1	44th Page of 87	TOC	1st	Previous	Next	↓Bottom	Just 44th

Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B1’ Filing	Date	First	Last	Other Filings

	1/11/01	43
	12/31/00	47		20-F
	11/24/00	1	45
	7/3/98	8
	12/31/97	18	65	20-F
	11/24/97	1	13
Filed on:	10/30/97	1	87
	10/29/97	1	19
	10/21/97	51		8-A12G, F-3/A
	10/10/97	1	4
	9/30/97	18
	9/5/97	43
	8/31/97	5	18
	7/1/97	8	19
	6/30/97	6	86
	4/2/97	51		20-F
	3/31/97	18	53
	1/17/97	39
	1/13/97	81
	1/12/97	43
	12/31/96	8	83	20-F, SC 13D/A
	12/12/96	18		6-K
	12/4/96	25
	9/30/96	18
	9/11/96	25
	6/30/96	6	83	6-K
	4/1/96	29
	3/31/96	18		6-K
	1/12/96	43
	1/1/96	59
	12/31/95	8	83	20-F, 20-F/A
	12/29/95	43
	11/1/95	40
	9/30/95	18
	6/30/95	18
	4/18/95	51
	3/31/95	18
	3/1/95	28
	1/13/95	65	81
	12/31/94	8	83
	3/9/94	64	80
	1/1/94	29
	12/31/93	56	83
	8/17/92	65	81
	7/16/92	4
				List all Filings

↑Top

Filing Submission 0000950148-97-002655 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Nam Tai Property Inc. – ‘424B1’ on 10/30/97

As of: Thursday, 10/30/97 · Accession #: 950148-97-2655 · File #: 333-36135

Prospectus — Rule 424(b)(1)Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Prospectus — Rule 424(b)(1)
Filing Table of Contents