Highway Holdings Reports Fiscal 2013 Third Quarter and Nine-Month Results

Highway Holdings Reports Fiscal 2013 Third Quarter and Nine-Month Results

HONG KONG, Jan. 28, 2013 (GLOBE NEWSWIRE) -- Highway Holdings Limited
(Nasdaq:HIHO) today reported results for its fiscal third quarter ended
December 31, 2012 -– reflecting net income and margin improvement for the
nine-month period.

Net income for the fiscal 2013 third quarter was $18,000, or $0.01 per diluted
share, compared with $75,000, or $0.02 per diluted share, in the third quarter
a year earlier. Net sales for the same period were $5.6 million compared with
$7.3 million a year ago.

Net income for the nine-month period of fiscal 2013 increased 89 percent to
$174,000, or $0.05 per diluted share, compared with $92,000, or $0.02 per
diluted share, a year earlier. Net sales for the nine months were $16.4
million compared with $19.4 million in the comparable period a year earlier.

"Despite reduced year-over-year sales and continued increases in labor and
other costs in China, gross margin for the quarter and nine months improved
slightly due to further streamlining initiatives and improved product mix. The
sales reductionin the fiscal 2013 third quarter compared with the same period
a year earlier was due entirely to the loss of low margin mobile phone case

"Excluding the lost sales from the mobile phone case business, net sales on a
year-over-year comparison were essentially flat, which suggests that business
overall has stabilized and the company is poised to regain momentum," said
Roland Kohl, chairman, president and chief executive officer of Highway

Gross profit margin for the three- and nine-month periods ended December 31,
2012 increased to 22.2 percent and 21.9 percent, respectively, compared with
18.2 percent and 19.5 percent, respectively, a year earlier. Gross profit
margin increased, in part, due to the termination of the low-margin mobile
phone case business, which negatively impacted gross margins last year. Kohl
also noted that management remains focused on further streamlining initiatives
to offset escalating overhead costs in China without sacrificing quality and
future business development. Operating income for the three-month period ended
December 31, 2012 was $8,000 compared with $6,000 in the prior year. Operating
income for the nine months was $255,000 compared with $52,000 a year earlier.

Kohl noted that the company is presently in discussions with some of its major
customers for substantial price increases and/or authorization to outsource
certain labor intensive assembly work to a lower labor-cost region in Asia.He
indicated that the relocation of certain assembly services to a neighboring
country should be an attractive alternative to higher pricing to customers.
"The initial response from our customers indicates support for utilizing a
lower-cost country, and we anticipate positive feedback with regard to quality
and service utilizing this manufacturing option once the operation fully ramps
up.We also expect that our ability to once again offer high quality
manufacturing services at low costs will greatly enhance our sales growth and
profitability, particularly in the new fiscal year," Kohl said.

Selling, general and administrative expenses were reduced by $88,000 and
$385,000 for the three- and nine-month periods, due to the lower turnover.
Selling, general and administrative costs as a percentage of net sales were
slightly higher in both the three- and nine-month periods ended December 31,
2012 -- reflecting the impact of decreased sales turnover, increased staff
salaries due to the inflationary situation and continued higher operating cost
in China.

Fluctuating currency exchange rates affected the company's net income for the
nine-month period ended December 31, 2012. During the nine-month period in
2012, the company reported a $26,000 currency exchange loss compared with a
$78,000 exchange gain in 2011.

Kohl noted the company's balance sheet remains strong. The company's total
cash and restricted cash position at December 31, 2012 was reduced by only
approximately $267,000 compared with fiscal year end at March 31, 2012,
despite aggregate dividend payments of $341,000, or $0.09 per diluted share
since March 2012,and unexpected custom deposit payments of approximately
$150,000. The company's cash position also benefited from the repurchase of
certain mobile phone case-related inventory by Highway Holdings' former

The company's current ratio was 4:1 at December 31, 2012. The total cash and
restricted cash exceeded all current and long term liabilities combined by
$2.4 million.

Kohl emphasized that the company is continuing its efforts to further upgrade
Highway Holdings' facilities in China, while reducing the overall size of the
operation to improve efficiency through advanced production methods and
manufacturing automation.

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. Highway Holdings' administrative offices
are located in Hong Kong and its manufacturing facilities are located in
Shenzhen in 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

                          (Financial Tables Follow)

Consolidated Statement of Income
(Dollars in thousands, except per share data)

                                         Three Months Ended Nine Months Ended
                                         December 31,       December 31,
                                         2012      2011     2012     2011
Net sales                                                  $16,398  $19,394
                                          $5,619   $7,338
Cost of sales                             4,369     6,002    12,804   15,618
Gross profit                                               3,594    3,776
                                          1,250    1,336
Selling, general and administrative       1,242     1,330    3,339    3,724
Operating income                          8         6       255      52
Non-operating items                                                
Interest expenses                         (2)      (4)     (7)      (23)
Exchange gain (loss), net                 8         6        (26)     78
Interest income                           2        1       7        3
Other income                             4         33       50       42
Total non-operating income                12        36      24       100
Net income before income tax and          20       42       279      152
non-controlling Interest
Income taxes                              (2)      33       (105)    (60)
Net Income before non-controlling         18        75       174      92
Less: Net income attributable to          0         0        0        0
non-controlling interest
Net income attributable to Highway                         $174   $92
Holdings Limited shareholders             $18       $75
Net Income per share – basic and diluted  $0.01     $0.02    $0.05    $0.02
Weight average number of shares                                    
Basic                                     3,778     3,777    3,778    3,777
Diluted                                   3,788     3,789    3,788    3,789

Consolidated Balance Sheet
(In thousands, except per share data)

                                                            Dec 31   March 31
                                                            2012     2012
Current assets:                                                      
Cash and cash equivalents                                    $5,308   $5,575
Restricted cash                                              643      643
Accounts receivable, net ofdoubtful accounts                4,120    3,724
Inventories                                                  2,628    3,970
Prepaid expenses and other current assets                    841      598
Total current assets                                         13,540   14,510
Property, plant and equipment, (net)                         1,856    2,027
Deposit for purchase of property, plant and equipment        0        42
Total assets                                                 $15,396  $16,579
Current liabilities:                                                 
Accounts payable                                             $1,824   $2,547
Current portion of long-term debt                            178      262
Obligation under capital lease – current portion             0        3
Accrual payroll and employee benefits                        694      852
Other liabilities and accrued expenses                       507      472
Net tax payable                                              182      153
Total current liabilities                                    3,385    4,289
Long term liabilities :                                              
Long-term debt – net of current portion                      0        112
Deferred income taxes                                        180      180
Total liabilities                                            3,565    4,581
Shareholders' equity:                                                
Common shares, $0.01 par value                               38       38
Additional paid-in capital                                   11,340   11,340
Retained earnings                                            467      634
Treasury shares, at cost – 5,049 shares as of December, 31,  (14)     (14)
2012; and March 31, 2012 respectively
Total Highway Holdings Limited shareholders' equity          11,831   11,998
Non-controlling interest                                     0        0
Total shareholders' equity                                   11,831   11,998
Total liabilities and shareholders' equity                   $15,396 $16,579

CONTACT: Gary S. Maier
         Maier & Company, Inc.
         (310) 471-1288
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