Highway Holdings Reports Fiscal 2014 Second Quarter Results

Highway Holdings Reports Fiscal 2014 Second Quarter Results

Net Income Up 94.2 Percent for Six-Month Period

HONG KONG, Nov. 5, 2013 (GLOBE NEWSWIRE) -- Highway Holdings Limited
(Nasdaq:HIHO) today reported results for its fiscal 2014 second quarter ended
September 30, 2013 -- reflecting sales growth, gross margin improvement and
higher net income.

Net income for the fiscal 2014 second quarter increased to $153,000, or $0.04
per diluted share, from net income of $27,000, or $0.01 per diluted share, a
year earlier. Net sales for the same period climbed 6.3 percent to $5.9
million from $5.5 million in the same period a year earlier. 

Net income for the six-month period increased 94.2 percent to $303,000, or
$0.08 per diluted share, from net income of $156,000, or $0.04 per diluted
share, a year earlier. Net sales for the six-month period increased 8.79
percent to $11.7 million from $10.8 million a year ago.

"Results for the quarter reflect organic sales growth, supported by ongoing
streamlining initiatives and a focus on addressing labor cost increases and
other related issues in China," said Roland Kohl, chairman, president and
chief executive officer of Highway Holdings.

He noted results for the past two quarters were impacted by direct and
indirect costs and expenses of approximately $100,000 associated with
supporting and upgrading the assembly operation of the company's subcontractor
in Myanmar. Kohl added that the company has commenced negotiations to acquire
a majority interest in the Myanmar operation from the local current
subcontractors. Kohl emphasized this potential investment has been enabled by
recent changes to business laws in Myanmar concerning foreign direct
investment and participation in local companies. However, Highway Holdings'
investment in the Myanmar facility still is subject to central government
approval, the timing of which is unknown.

Gross profit for the fiscal 2014 second quarter increased to $1.4 million from
$1.2 million a year ago due to increased net sales and increased gross
margins. Gross profit as a percentage of sales for the same period was 24
percent compared with 22 percent a year earlier. Gross profit for the fiscal
2014 six-month period increased to $2.6 million from $2.3 million a year ago,
while gross profit as a percentage of sales increased to 23 percent from 22
percent in the same period in fiscal 2013.

Kohl said he is optimistic about the company's long-term sales and earnings
growth opportunities, supported by current and new business trends and the
anticipated transfer of much of the company's labor-intensive assembly
business to Myanmar. "We anticipate that our overall manufacturing costs and
expenses will be greatly reduced in the future once most of the company's
labor intensive assembly work has been transferred to this lower-cost
facility," Kohl said.

Net income for the second quarter was impacted by an unfavorable currency
exchange loss of $27,000 compared with an exchange gain of $41,000 for the
same period last year – reflecting a weakening U.S. dollar. For the fiscal
2014 six-month period, the company realized a reduced currency exchange loss
of $24,000 compared with a currency exchange loss of $34,000 a year earlier.
Since the company does not engage in currency exchange rate hedging, Highway
Holdings will in the future continue to realize currency exchange gains and
losses as a result of the fluctuation of currency exchange rates.

Kohl highlighted the company's strong balance sheet, with cash and cash
equivalents and restricted cash of $4.7 million, or approximately $1.24 per
diluted share, exceeding all of its short- and long-term liabilities by $1.4
million. He noted that the company's cash position would have been
significantly higher without Chinese customs laws requiring custom deposit
payments, representing a current aggregate cash amount of approximately $1.4
million, associated with the company's import contracts for raw materials.
These cash deposits are included in "Prepaid expenses and other current
assets" on the balance sheet.

Current liabilities at September 30, 2013 totaled $3.3 million and current
assets were $13.8 million. Total shareholders' equity at September 30, 2013
was $12.2 million, or $3.22 per diluted share, compared with $12.01 million,
or $3.17 per diluted share, at March 31, 2013.

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
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 Six Months Ended
                                           September 30,      September 30,
                                                                   
                                          2013      2012     2013     2012
                                                                   
Net sales                                  $5,854    $5,507   $11,726  $10,799
Cost of sales                              4,461     4,300    9,083    8,435
Gross profit                               1,393     1,207    2,643    2,344
Selling, general and administrative        1,188     1,182    2,213    2,097
expenses
Operating income                          205       25       430      247
                                                                   
Non-operating items                                                 
Interest expenses                          --       (3)      (1)      (5)
Exchange gain /(loss), net                 (27)      41       (24)     (34)
Interest income                            5         4        9        5
Other income/(expenses)                    (1)       0        (1)      46
Total non-operating income/(expenses)      (23)      42       (17)     12
                                                                   
Net income before income tax and           182       67       413      259
non-controlling interests
                                                                   
Income taxes                               (30)      (40)     (111)    (103)
Net Income before non-controlling          152       27       302      156
interests
Add: Net Loss attributable to              1         0        1        0
non-controlling interests
Net Income attributable to                 $153      $27      $303     $156
HighwayHoldings Limited
                                                                   
                                                                   
Net Income per share - basic and diluted  $0.04     $0.01    $0.08    $0.04
                                                                   
Weighted average number of shares                                  
Basic                                      3,778     3,778    3,778    3,778
Diluted                                    3,788     3,788    3,788    3,788

                                                                    
                                                                    
HIGHWAY HOLDINGS LIMITED AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands, except per share data)
                                                                    
                                                                    
                                                             Sept 30 March 31
                                                              2013    2013
Current assets:                                                      
Cash and cash equivalents                                     $4,057  $4,634
Restricted cash                                               643     643
Accounts receivable, net of doubtful accounts                 4,001   3,958
Inventories                                                   3,091   2.957
Amount due from an equity method investee                     --      110
Prepaid expenses and other current assets                     1,961   1,114
Total current assets                                          13,753  13,416
                                                                    
Property, plant and equipment, (net)                          1,474   1,769
Loan receiveables                                             260     167
                                                                    
Total assets                                                  $15,487 $15,352
                                                                    
Current liabilities:                                                 
Accounts payable                                              $1,415  $1,515
                                                                    
Current portion of long-term debt                             --      112
Accrual payroll and employee benefits                         835     885
Other liabilities and accrued expenses                        562     501
Dividend payable                                              151     114
Net Tax payable                                               253     158
Total current liabilities                                     3,216   3,285
Long term liabilities:                                               
                                                                    
                                                                    
Deferred income taxes                                         59      59
Total liabilities                                             3,275   3,344
                                                                    
Shareholders' equity:                                                
Common shares, $0.01 par value                                38      38
Additional paid-in capital                                    11,340  11,340
Retained earnings                                             779     628
Accumulated other comprehensive income                       64      16
Treasury shares, at cost – 5,049 shares as of September, 30,  (14)    (14)
2013; and March 31, 2013 respectively
Total Highway Holdings Limited shareholders' equity           12,207  12,008
Non-controlling interest                                      5       0
Total shareholders' equity                                    12,212  12,008
Total liabilities and shareholders' equity                    $15,487 $15,352

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