6-K 1 v012014_6-k.htm
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 6-K


REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934


For the month of January 2005


HIGHWAY HOLDINGS LIMITED
(Translation of Registrant's Name Into English)
 

Suite 810, Level 8
Landmark North
39 Lung Sum Avenue
Sheung Shui
New Territories, Hong Kong
(Address of Principal Executive Offices)


(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F X Form 40-F ___

(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.)

Yes ___ No X_

(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-_______________.)

Attached to this Report on Form 6-K is the press release issued by the registrant on January 31, 2005.


     
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

     
  HIGHWAY HOLDINGS LIMITED
 
 		  
 		  
 
Date: January 31, 2005 By:   /s/ ROLAND W. KOHL
 
  Roland W. Kohl
Chief Executive Officer



 
     


   
  NEWS RELEASE


CONTACTS: Gary S. Maier/Sophie Xu
  Maier & Company, Inc.
  (310) 442-9852
    
HIGHWAY HOLDINGS REPORTS
FISCAL 2005 THIRD QUARTER RESULTS
 
HONG KONG —January 31, 2005 — Highway Holdings Limited (Nasdaq:HIHO) today announced financial results for its 2005 fiscal third quarter ended December 31, 2004, reflecting sales strength from its metal components and clock divisions.
 
Net sales for the quarter increased 13 percent to $7.3 million compared with $6.5 million in fiscal 2004. Net income for the quarter was $116,000, or $0.03 per diluted share, compared with $214,000, or $0.07 per diluted share, a year ago.
 
For the nine-month period, net sales increased 6.5 percent to $19.9 million from $18.6 million a year earlier. Net income for the nine months of fiscal 2005 was $490,000 or $0.15 per diluted share, compared with $574,000, or $0.19 per diluted share, in fiscal 2004.
 
“Although net sales increased for the quarter and nine months, results for the third fiscal quarter were still impacted by substantial increases for raw materials and related services. We are working with our major customers to address the escalating raw material increases and have already imposed, and are continuing to impose, price increases, on lower-margin customers,” said Roland Kohl, chairman and chief executive officer of Highway Holdings.
 
He added that metal prices have increased approximately 27 percent, with plastic material prices climbing 30 to 45 percent and transportation costs increasing by more than 20 percent since the company’s fiscal year end in March 2004.
 
“While the increased material costs lowered our profitability for the quarter, the losses were mainly the result of restructuring expenses associated with the company’s sales office in Germany, and by a strong decline in our camera business,” Kohl said.
 
“While raw materials costs are certainly of concern, we are nonetheless encouraged by the recent commencement of original equipment manufacturing production of light fixtures for OSRAM GmbH, a subsidiary of Siemens AG (NYSE:SI), which had been delayed,” Kohl said.
 
Kohl said the company’s camera business continues to be weak, as digital cameras and mobile phones gain market share from lower-cost traditional photography products like single-use cameras. He added that Highway Holding’s specialty under-water photography product sales are encouraging, but not enough to offset weakness in its other camera product lines. Kohl indicated that the company is seriously evaluating strategic options to stop the losses and address its camera business overall.
 

 
     
 

Sales of metal stamped parts and components for the third fiscal quarter of 2005 amounted to $5.2 million, an increase of $1.3 million, or 34.9 percent, over a year ago — representing 70.8 percent of the company’s total sales. Sales in the metal manufacturing operations reflect revenues generated from the previously announced orders from the company’s larger OEM clients, such as OSRAM, Miele, Berger Lehr and KEM. In addition to being the largest segment of Highway Holdings’ three business segments, metal manufacturing also provides the company with its largest gross margins. However, the recent increases in cost of materials offset the impact on the company’s gross profit that otherwise would have been realized from a 34.9 percent increase in metal sales. As a result of the cost increases, gross profit for the third fiscal quarter remained unchanged, despite the significant increase in sales.
    
Clock and watches sales for the quarter increased by 30.8 percent to $1.5 million from $1.2 million last year, representing approximately 20.8 percent of total sales. Kohl noted that sales of clocks and watches were positively affected by the commencement of new OEM clock orders, as well as strong sales contributions from the company’s restructured German sales office. “Despite a turnaround in sales from our German office, our German operations continue to operate at a heavy loss and management is focused on finalizing the restructuring and on bottom-line improvement,” Kohl said. 
    
As anticipated, sales for the camera unit decreased further in the fiscal third quarter to $613,000 from $1.5 million a year ago - representing 8.4 percent of total sales compared with 22.6 percent a year ago.
 
Selling, general and administrative expenses for the third quarter increased to $1.4 million from $1.1 million a year ago. The increase of the selling, general and administrative expenses mainly reflects a primarily non-cash legal settlement expenses with the company’s patent attorney associated with its camera patents and the concluded Fuji litigation, in addition to personnel costs at its German sales operation. The company does not expect any additional future costs associated with the Fuji lawsuit.
 
As a result of (i) price increases of raw material, (ii) price increases of oil and related components and services, and (iii) increased selling, general and administrative expenses, the company incurred a loss in its operations of $169,000 in the December 31, 2004, fiscal third quarter, compared with operating income of $76,000 during the same fiscal quarter last year. However, excluding the non-cash selling, general and administrative expenses, the company would have had operating income.
 
Kohl emphasized that the company’s balance sheet remains very strong. At December 31, 2004, the company had working capital of $9.6 million compared with $8.8 million at March 31, 2004. Total shareholders’ equity improved to $13.3 million from $12.8 million last year. The company’s current ratio was 2.25:1 at December 31, 2004.
 
About Highway Holdings
 
Highway Holdings produces a wide variety of high-quality products for blue chip original equipment manufacturers -- from simple parts and components to sub-assemblies and finished products. It also manufactures clocks, clock movements and watches for sale under the company's own Kienzle Uhren brand name, as well as for unaffiliated companies. Additionally, Highway Holdings manufactures or produces other finished products, including single-use and 35mm cameras and certain electronic products. Highway Holdings is headquartered in Hong Kong and operates manufacturing facilities in Shenzhen province of the People's Republic of China
 
Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements which involve risks and uncertainties, including but not limited to economic, competitive, governmental, political and technological factors affecting the company's revenues, operations, markets, products and prices, and other factors discussed in the company’s various filings with the Securities and Exchange Commission, including without limitation, the company’s annual reports on Form 20-F.


# # #
(Financial Tables Follow)



 
     


HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Statement of Income
(Dollars in thousands, except per share data)
(Unaudited)

   
Three Months Ended
December 31,
Nine Months Ended
December 31,
2004
2003
2004
2003
  
                   
Net sales
  
$
7,309
  
$
6,457
  
$
19,861
  
$
18,644
  
Cost of sales
    
6,111
    
5,259
    
16,080
    
15,179
  
Gross profit
    
1,198
    
1,198
    
3,781
    
3,465
  
Selling, general and administrative expenses
    
1,367
    
1,122
    
3,634
    
3,101
  
Operating income (loss)
    
(169
)
  
76
    
147
    
364
  
                           
Non-operating expense
                          
Interest expenses
    
(26
)
  
(13
)
  
(75
)
  
(54
)
Exchange gain, net
    
308
    
214
    
430
    
321
  
Interest income
    
9
    
0
    
12
    
10
  
Other income
    
19
    
11
    
67
    
50
  
Total non-operating income
    
310
    
212
    
434
    
327
  
                           
Share of loss of affiliate
    
0
    
0
    
(1
)
  
0
  
                           
Net income before taxes
    
141
    
288
    
580
    
691
  
Income taxes
    
25
    
74
    
90
    
116
  
Net income before minority interest
    
116
    
214
    
490
    
575
  
                           
Minority interest
    
0
    
0
    
0
    
1
  
Net income
  
$
116
  
$
214
  
$
490
  
$
574
  
                           
Earning per share - basic
  
$
0.04
  
$
0.07
  
$
0.15
  
$
0.19
  
Weighted average number of shares - basic
    
3,227
    
2,993
    
3,227
    
3,034
  
Earning per share - diluted
  
$
0.03
  
$
0.07
  
$
0.15
  
$
0.18
  
Weighted average number of shares - diluted
    
3,339
    
3,255
    
3,343
    
3,253
  






     
 

HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands, except per share data)
           
   
December 31
 
March 31
  
   
2004
  
2004
  
   
(Unaudited)
      
Current assets
          
Cash and cash equivalents
  
$
4,673
  
$
4,158
  
Restricted cash
    
965
    
965
  
Short term investment
    
298
    
309
  
Accounts receivable, net of doubtful accounts
    
4,554
    
3,763
  
Inventories
    
6,080
    
4,394
  
Prepaid expenses and other current assets
    
701
    
639
  
Total current assets
    
17,271
    
14,228
  
               
               
Property, plant and equipment, net
    
3,771
    
3,780
  
Investment and advance in affiliate
    
7
    
7
  
Industrial property rights
    
590
    
673
  
               
Total assets
  
$
21,639
  
$
18,688
  
               
Current liabilities:
              
Short-term borrowings
  
$
1,920
  
$
1,933
  
Current portion of long-term debt
    
350
    
173
  
Accounts payable
    
3,683
    
2,296
  
Accrual payroll and employee benefits
    
394
    
321
  
Accrued professional fees
    
268
    
110
  
Other liabilities and accrued expenses
    
903
    
543
  
Income tax payable
    
175
    
78
  
Total current liabilities
    
7,693
    
5,454
  
               
Long-term debt
    
495
    
212
  
Deferred income taxes
    
179
    
179
  
Minority interest
    
2
    
2
  
               
Shareholders’ equity:
              
Common shares, $0.01 par value
              
Authorized, 20,000,000 shares; issued 3,305,987 shares at December 31, 2004; outstanding shares at Dec. 31, 2004: 3,268,187
   
33
    
31
  
Additional paid-in capital
    
9,458
    
9,035
  
Retained earnings
    
4,119
    
3,954
  
Accumulated other comprehensive income
    
(287
)
  
(126
)
Treasury shares, at cost-37,800 shares at December 31, 2004
    
(53
)
  
(53
)
Total shareholders’ equity
    
13,270
    
12,841
  
               
Total liabilities and shareholders’ equity
  
$
21,639
  
$
18,688