Highway Holdings Reports Fiscal 2014 Third Quarter and Nine-Month Results

Highway Holdings Reports Fiscal 2014 Third Quarter and Nine-Month Results

HONG KONG, Jan. 27, 2014 (GLOBE NEWSWIRE) -- Highway Holdings Limited
(Nasdaq:HIHO) today reported results for its fiscal third quarter ended
December 31, 2013 -– reflecting increased sales and profitability for both the
quarter and nine-month period.

Net income for the fiscal 2014 third quarter was $149,000, or $0.04 per
diluted share, compared with $18,000, or $0.01 per diluted share, in the third
quarter a year earlier. Net sales for the same period increased 3.5 percent to
$5.8 million from $5.6 million a year ago.

Net income for the nine-month period of fiscal 2014 increased sharply to
$451,000, or $0.12 per diluted share, from $174,000, or $0.05 per diluted
share, a year earlier. Net sales for the nine months climbed 7 percent to
$17.5 million from $16.4 million in the comparable period a year earlier.

Gross profit margin for the three- and nine-month periods ended December 31,
2013 increased to 22.6 percent and 22.6 percent, respectively, compared with
22.2 percent and 21.9 percent, respectively, a year earlier. Gross profit
margin increased due to ongoing streamlining efforts and slight price
increases to customers.

Operating income for the three-month period ended December 31, 2013 was
$132,000 compared with $8,000 in the prior year. Operating income for the nine
months more than doubled to $563,000 from $255,000 a year earlier.

"Results for the quarter reflect the company's focus on quality manufacturing
and customer service to increase business to existing customers and attract
additional business opportunities. A key challenge is to balance a highly
inflationary environment in China and Hong Kong, including higher wages for
employees, with customer pricing expectations," said Roland Kohl, chairman,
president and chief executive officer of Highway Holdings.

Kohl noted that the company is presently in discussions with most of its major
customers for further price increases to match escalating operating costs in
China and/or authorization to transfer labor intensive assembly work to its
lower-cost, sub-contracting operation in Myanmar. "The relocation of certain
labor intensive assembly services to Myanmar should be an attractive
alternative to our customers, since it is a practical solution to maintaining
quality and service without, in most cases, further price increases," Kohl
said.

He noted that the Chinese government recently announced another minimum wage
increase of approximately 13 percent effective February 1, 2014 for the
Shenzhen region, reflecting the difficulty of attracting workers and further
contributing to an inflationary environment in China.

Currency exchange rates positively affected the company's net income for the
nine-month period ended December 31, 2013. The company reported a $28,000
currency exchange gain compared with a $26,000 exchange loss in 2012 -- mainly
due to the increased strength of the RMB currency at December month ended. 

Kohl noted the company's balance sheet remains strong.The company's total
cash, cash equivalents and restricted cash position at December 31, 2013 was
$4.5 million compared with $5.3 million at March 31, 2013, despite aggregate
dividend payments of $302,000, or $0.08 per diluted share since March 2013,
and approximately $1 million of cash that the company was required to deposit
with the Chinese Customs Department.The Customs Department has commenced
returning a portion of the deposits, and Highway Holdings anticipates that
most of its deposits will be returned by mid-year.

The company's current ratio was 4:1 at December 31, 2013. The total cash, cash
equivalents and restricted cash exceeded all current and long term liabilities
combined by $954,000.

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 Nine Months Ended
                                         December 31,       December 31,
                                                                  
                                         2013      2012     2013     2012
                                                                  
Net sales                                $5,816    $5,619   $17,543 $16,398
                                                                  
Cost of sales                             4,503     4,369    13,586   12,804
                                                                  
Gross profit                              1,313    1,250   3,957    3,594
                                                                  
Selling, general and administrative       1,181     1,242    3,394    3,339
expenses
Operating income                         132       8        563      255
                                                                  
Non-operating items                                                
Interest expenses                         0         2        1        7
Exchange gain (loss), net                 53        8        28       (26)
Interest income                           4         2        13       7
Other income                             48        4        47       50
Total non-operating income                105       12       87       24
                                                                  
Net income before income tax and          237       20       650      279
non-controlling Interest
Income taxes                              89        2        200      105
                                                                  
Net Income before non-controlling         148       18       450      174
interest
Less : Net income attributable to         1         0        1        0
non-controlling interest
Net income attributable to Highway        $149     $18     $451     $174
Holdings Limited shareholders
                                                                  
                                                                  
Net Income per share – basic and diluted  $0.04     $0.01    $0.12    $0.05
Weight 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)
                                                          
                                                          
                                                   Dec 31  March 31
                                                   2013    2013
Current assets:                                            
Cash and cash equivalents                           $3,864  $4,634
Restricted cash                                     643     643
Accounts receivable, net of doubtful accounts       3,774   3,958
Inventories                                         3,478   2,957
Amount due from an equity method investee           --      110
Prepaid expenses and other current assets           2,191   1,114
Total current assets                                13,950  13,416
                                                          
Property, plant and equipment, (net)                1,356   1,769
Loan receivables                                    435     167
                                                          
Total assets                                        $15,741 $15,352
                                                          
Current liabilities:                                       
Accounts payable                                    $1,637  $1,515
Current portion of long-term debt                   --      112
Accrual payroll and employee benefits               986     885
Other liabilities and accrued expenses              529     501
Dividend payable                                    --      114
Net Tax payable                                     342     158
Total current liabilities                           3,494   3,285
                                                          
Long term liabilities :                                    
                                                          
Deferred income taxes                               59      59
Total liabilities                                   3,553   3,344
                                                          
Shareholders' equity:                                      
Common shares, $0.01 par value                      38      38
Additional paid-in capital                          11,340  11,340
Retained earnings                                   777     628
Accumulated other comprehensive income             42      16
Treasury shares, at cost – 5,049 shares as of              
December, 31, 2013; and March 31, 2013 respectively (14)    (14)
Total Highway Holdings Limited shareholders' equity 12,183  12,008
Non-controlling interest                            5       --
Total shareholders' equity                          12,188  12,008
Total liabilities and shareholders' equity          $15,741 $15,352

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